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November 24, 2011Mobile revenue growth and outlook Q3 2011: The outlook bleakens
ReportsIn this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request
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August 15, 2011
Mobile revenue growth and outlook Q2 2011: MTR cuts hit but stabl [...]
ReportsIn this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request
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August 8, 2011H3G H1 2011 results: UK strengthens, Italy weakens
ReportsAfter strong underlying improvements in growth and profitability in 2010, in H1 2011 H3G Europe's service revenue growth was steady at 3% and margins only slightly improved to (underlying) EBIT breakeven. In the UK, service revenue growth accelerated to 7% (from -1% in H2 2010), with EBIT maintained at about breakeven, as the UK company's ongoing strong contract subscriber growth fed through. Italy suffered roughly the opposite fate, with service revenue growth falling to -8%, as its recent subscriber losses fed through, and EBIT remained firmly negative.
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June 14, 2011
Mobile user survey 2011: More smartphones, more usage of smartpho [...]
ReportsThe most dramatic observation from our survey is the surge in mobile data service usage: 48% of UK mobile users now use a data service at least once a month, up from just 30% last year. This increase is substantially all from the increased number of internet-centric smartphones (i.e. iPhone, BlackBerry and Android handsets) in the base. The internet-centric smartphones themselves had substantially no reduction in data usage penetration rates (all at 90%+) despite their volumes surging, with users from all age and socio-economic groups using them for data services. Data service usage penetration on a daily basis actually increased for Android and BlackBerry handsets. This supports our view that it is the nature of these handsets in terms of their ease-of-use for data services that is driving overall usage, and that overall data usage will continue to surge as they continue to diffuse through the subscriber base.
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May 25, 2011
Mobile revenue growth and outlook Q1 2011
ReportsIn this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete.
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March 31, 2011
H3G 2010 results: improving to breakeven
ReportsH3G Europe improved its revenue growth and margins in 2010, albeit not by as much as its headline figures claimed. It is currently growing at 5% with EBIT at around breakeven. Given that its parent company is likely to want to keep EBIT positive, it is likely to be constrained on future investment in subscriber growth, limiting its potential going forward. The UK was particularly strong, with dramatically improved contract subscriber growth, and margins improving despite this, driven by the completion of the T-Mobile network share implementation helping margins and the smartphone revolution playing to the company's 3G network strengths.
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March 24, 2011
UK 4G spectrum consultation: preserving the big 4
ReportsOfcom is proposing to design the 800MHz and 2.6GHz spectrum auctions to ensure that the UK mobile market remains at four players, through a complex set of rules largely designed to help H3G get the spectrum it needs to remain competitive. However, the sting in the tale is that Ofcom expects H3G to pay around £600m for this spectrum, which it may not want to do, and it is not clear what the backup plan would then be. We expect the general theme of regulators seeking to protect a fourth player to repeat across Europe and across regulatory areas, especially as the US market may consolidate towards three with AT&T's proposed takeover of T-Mobile USA.
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March 9, 2011
Mobile revenue growth and outlook Q4 2010: Growth improves, but o [...]
ReportsEuropean mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative. While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France. The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months.
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November 24, 2010
HD platform differentiation
ReportsEuropean mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally. GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern. Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero. -
November 24, 2010
Mobile revenue growth and outlook Q3 2010: smartphones surge, rev [...]
ReportsEuropean mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally. GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern. Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero. -
March 30, 2010
H3G 2009 full year results: steadily loss-making
ReportsH3G Group organic service revenue growth was just 0.2% in Europe in 2009, with EBITDA now roughly breakeven and cashflow remaining firmly stuck in negative territory, and lower subscriber net adds driving most of the EBITDA improvement. H3G UK is outperforming the UK market, but only just, and remains loss-making. Its prospects for 2011 are good, with its network share roll-out likely to have been completed and lower termination rates likely to be implemented, and the Orange/T-Mobile merger could provide significant long term benefits, but it will still require significant investment to gain scale. H3G Australia is now a sound business after the merger with Vodafone Australia, but all of the European businesses are sub-scale, with significant further investment and/or M&A activity required to reach sustainable profitability. -
August 17, 2009
H3G H1 2009 results: falling short
ReportsH3G's H1 2009 results showed some improvement on revenue growth and profitability on a very weak H2 2008, but it is still growing very slowly while barely EBITDA positive. The company has at last admitted that it will not be EBIT positive in 2009, and without some major changes we doubt it ever will be. For the UK business, there are a number of factors which may turn in its favour over the coming two years, allowing a more concerted marketing push to scale; for Italy and the smaller European operation, consolidation appears the only answer.
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March 29, 2009
H3G 2008 results: Italy drags the group down
ReportsH3G group's H2 2008 results showed a 5% decline in revenue on a constant currency basis and a return to strongly negative underlying EBITDA, with a margin of -17% in H2 2008 and -8% for the year as a whole, versus a margin of -1% in 2007. The UK performed reasonably well, with 11% revenue growth and improving margins, albeit still being cashflow negative, but Italy suffered from an 18% revenue decline and falling margins. The company's target of positive EBIT in 2009 looks very unlikely without contributions from some major accounting adjustments, and the consolidation move in Australia looks likely to be repeated elsewhere.
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February 11, 2009
European mobile market consolidation
ReportsThe planned merger of Vodafone and H3G in Australia has raised the question of what consolidation could occur in Europe, although a direct analogy is not appropriate because Vodafone is much weaker in Australia (#3 operator) than it is in the larger European countries, and so would face much more regulatory scrutiny in Europe. The only merger opportunities in the top five markets which would have a similar or lower theoretical impact on competition (and hence would theoretically be as easily approved) in the top five European countries would be T-Mobile and H3G in the UK, Wind and H3G in Italy, and any operator with Yoigo in Spain. There are massive cost savings to be had from in-market consolidation, with network, marketing and general administration costs all fully overlapping between operators. The non-merging players would also enjoy a period of less competitive intensity, which may last indefinitely.
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August 31, 2008
H3G H1 2008 results and datacard economics
ReportsH3G Group's H1 2008 results showed static revenue and EBITDA slipping back into negative territory, neither of which bode well for the company's target of being EBIT positive next year.
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April 7, 2008
H3G H1 2007 results: slow improvements, unreasonable expectations
ReportsH3G Group's growth continued to slow in H2 2007, and it is now growing at just 6%, versus 10% 6 months ago, with falling ARPU combining with static subscriber net additions.
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December 20, 2007
H3G/T-Mobile network sharing: joining at the hip
ReportsH3G and T-Mobile have agreed to fully share their 3G networks, with their networks being roughly doubled to a combined 13,000 sites over the next two years.
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October 31, 2007
H3G’s Skypephone: cheap minutes, but cheaper handset
ReportsH3G has launched the Skypephone', a Skype-branded phone with a free Skype VoIP service fully integrated into the handset.
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August 22, 2007
H3G HI 2007 results – Slow growth
ReportsH3G's revenue growth has slowed significantly, with H1 revenue flat on the previous half, driven by steady churn and a reduced investment in customer acquisition.
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March 25, 2007
H3G 2006 results: still burning
ReportsH3G's H2 2006 results were a mixed bag, with the UK's revenue growth strong but Italy's weak, churn reduced but unit SACs up, and non-SAC operating costs reduced but capex up sharply
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January 23, 2007
H3G drops roaming charges
ReportsH3G has removed roaming charges for customers roaming onto its own overseas networks. While reducing roaming prices can be partially, or even fully, compensated for by elasticity effects, removing them altogether has far more limited direct compensations, especially when consumers are on bundle tariffs -
November 22, 2006
H3G’s X-Series and the mobile internet (or lack thereof)
ReportsH3G's X-Series is not quite as innovative as it was presented to be, given that T-Mobile's Web n' Walk is very similar in concept (flat rate data tariffs, 3rd party Internet services) and has been available since June 2005
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September 3, 2006
H3G results: the lengthening path to profitability
ReportsH3G has extended its deadline for hitting EBITDA breakeven, with this now around 12 months later than its previous forecast, we believe due to management failing to understand the extent of its churn problem.The Zune Marketplace is no match for the iTunes Store, with a smaller repertory of music and no video to supply the Zune, since Microsoft has announced it will soon sell video for the top-end Xbox 360, around which its home-entertainment' strategy is based.We figure the costs of switching to the Zune are low, but Microsoft will be lucky to sell 1 million Zunes in the Christmas quarter if it does, revenue will rise by less than 1%, so the Zune is of limited interest, whether successful or notSector Fixed Line (Internet and Voice). -
April 9, 2006
H3G results: 3 broken promises
ReportsH3G's 2005 results underperformed in 3 key areas: net subscriber additions were lower than promised, unit SACs were higher than promised and the group failed to reach EBITDA breakeven as promised. 2006 promises to be much worse due to a markedly bigger drop of about 11.5% in weighted share of commercial impacts in 2005, due to a number of factors (not just multichannel platform growth), and an anticipated decline of between 2% and 5% in total TV NAR in 2006. Taking a mid-value of -3.5% yields a drop in ITV plc NAR of around £180 million in 2006Sector Fixed Line (Internet and Voice).
