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August 19, 2019Virgin Media UK: subscribers fall but ARPU grows
Flash Report, ReportsVirgin Media’s results were quite mixed, with the subscriber base shrinking in a very slow market, but ARPU and revenue returning to growth despite pricing pressure and regulatory drags. The outlook remains challenging, but market pricing does seem to be easing with no repeat of the damaging Openreach price cuts on the horizon. ‘Full fibre’ roll-outs will bring further challenges, but opportunities as well, with the accompanying focus on higher speeds likely to be a significant operational upside in the short to medium term.March 20, 2019Virgin Media UK: proceeding with caution as speed advantage comes [...]
Flash Report, ReportsAfter strong underlying 2018 results, the more subdued outlook for 2019 is an important shift, driven by regulatory pressure on mobile, higher programming costs, one-offs and softening demand. Lightning is continuing to drive market share gains in new build areas, and should provide a 2ppt tailwind to revenue growth in 2019, but enhanced visibility on the economics of rollout suggests that its conservative approach is a wise one. In existing build areas, Virgin Media is facing-off pricing pressure from TalkTalk on high speed, and potentially from BT on even higher ultrafast speeds, with it moderating pricing and launching a market-beating 500Mbps product in Spring 2019 in response.
January 10, 2019UK broadband, telephony and pay TV trends Q3 2018
Market Outlook, ReportsBroadband market volume growth resumed its downward trend in the September quarter after a blip in the previous quarter that was likely caused by a wholesale transfer distorting the figures. Revenue growth, however, perked up to 1.9% from 1.7% in the previous quarter, an encouraging recovery especially given that it was not primarily driven by the timing of a price increase. ARPU growth improved across all four of the major operators, countering recent trends, with a focus on higher value offerings a common theme. High speed broadband adoption accelerated in the quarter across most operators, encouraged by Openreach’s volume discount offer, although this was partially driven by keener high speed pricing. Revenue growth at Virgin Media, Sky and TalkTalk converged at around 3%, with BT Consumer lagging at -1%. However, excluding the effect of BT’s shrinking telephony-only base and smoothing the sporadic boost of its 9-monthly price rise, BT Consumer’s revenue is in the middle of the pack at 3.0%
September 11, 2018UK mobile market Q2 2018: Disappointment before dawn
Market Outlook, ReportsUK mobile market service revenue grew by 1.7% in Q2, up from 1.3% in the previous quarter, a disappointing result in the context of boosts from both IFRS 15 accounting and the annual price rises in the quarter. O2 was the star performer this quarter, with its service revenue growth leaping ahead to claim the top spot. BT/EE’s service revenue growth declined on an underlying basis, with weak contract net adds over the last six months catching up with it, and H3G and Vodafone were slightly improved and steady respectively excluding some one-off effects. Next quarter, the impact from the EU roaming cuts will annualise out, providing a substantial fillip to all operators. Ceteris paribus, this would put market growth in the vicinity of 4%, a figure not reached for years.
June 14, 2018UK broadband, telephony and pay TV trends Q1 2018: Diverging stra [...]
Market Outlook, ReportsUK residential communications market revenue growth strengthened in Q1, but this was entirely driven by an overlapping price increase from BT, and the decline in market volume growth continues. Continued pressure on both subscriber volume growth and ARPU has led to diverging strategies, with most operators focused on sustaining ARPU, but TalkTalk chasing volumes at the low end, with the former approach currently proving more successful. Looking forward, the benefit of BT’s price rise will fall away completely next quarter and market revenue growth will likely resume its downward trend, but the nadir may be within sight if the flight to quality persists at most operatorsMay 21, 2018Virgin Media Q1 2018 results: Good, but beware headlines
Focus Report, Market Outlook, ReportsThe highlight of Virgin Media’s Q1 results was the return to growth for its UK cable ARPU (+1.3%), although the improvement in trend should be interpreted with caution due to accounting changes. Headline group revenue growth of 5.2% was boosted by profit-neutral handset sales, with underlying growth of around 3.2% – still strong in the sector context. Virgin Media continues to do relatively well in the increasingly challenging UK broadband market, but with evidence of limited pricing power, sluggish roll-out and subscriber growth, revenue trends look set to slow.
May 18, 2018Vodafone/Liberty Global deal: Slim economics and regulatory risk
Focus Report, Market Outlook, ReportsVodafone’s acquisition of Liberty's assets in Germany and Central Europe is likely to face regulatory scrutiny at the EU – and possibly also German – level. We view Vodafone’s expectation of closure in mid-2019 with no remedies as unlikely. The economics of the deal for Vodafone are slim, highly reliant on extracting sizeable synergies, and vulnerable to operational risk and potential remedies for regulatory approval, particularly in Germany. While we see some synergy benefit from combining two cable assets in Germany, we are unconvinced of meaningful benefits from combined fixed/mobile offerings.
March 2, 2018UK broadband, telephony and pay TV trends Q4 2017
Flash Report, ReportsUK residential communications market revenue growth fell again to 1.2%, with weakening ARPU growth the main driver. New customer pricing remains flat to down, and existing customers are being increasingly discounted, fuelling the ARPU weakness. High speed broadband adoption is proceeding apace, but the high speed premium is fairly thin, muting the impact on ARPU. Regulated wholesale price cuts from Openreach finalised today and due in April 2018 will not help. Looking forward, the March quarter will benefit from price timing effects at BT and Virgin Media, but we fear that the rest of 2018 will follow the current downward trend and the operators will need to adjust to an ex-growth environment.February 26, 2018Virgin Media Q4 2017 results: Growth limited by market pressures
Flash Report, ReportsVirgin Media’s Q4 performance was a little softer than expected, with subscriber figures quite weak and no improvement in ARPU growth despite a better implementation of its annual price rise. The cause is however likely market-driven, with broadband demand slowing and all operators struggling for ARPU growth, and Virgin Media does now lead the market for subscriber, RGU and revenue growth.The prospects for 2018 are solid if not spectacular, with Project Lightning driving market share gains and ARPU defended by a network speed advantage that will last for many years yet.
November 24, 2017TalkTalk Group Q2 2017/18 results: Growth at a cost
ReportsTalkTalk continued to maintain positive broadband net adds in Q2 despite increased churn, and its on-net revenue growth turned positive as well, helped by the turnaround in subscriber growth trends and an overlapping price increase implemented during the quarter. The return to growth is taking its toll in marketing costs however, and the company is now guiding to a full year ‘headline’ EBITDA at the lower end of its previous given range, and this is after redefining ‘headline’ to exclude losses from its winding-down mobile business. Even this looks challenging given the cost trends in the first half of the year. The company’s new strategy of subscriber growth and focusing on the basics is probably the right one, but it is proving tough to implement in a slowing and increasingly competitive marketNovember 20, 2017Virgin Media Q3 2017 results: Building acceleration
ReportsVirgin Media’s subscriber figures were flat on the prior year quarter, a robust performance in a slowing and increasingly competitive market, with ARPU growth still weak but at least not worsening. Project Lightning had another successful quarter, accelerating strongly and passing an additional 147k premises, which bodes well for subscriber acceleration into 2018. A recently implemented price increase should boost ARPU growth next quarter, on the basis that it successfully limits the retention discounting that characterised last year’s price increase, but such a boost will be limited by wider market pricing pressuresSeptember 1, 2017UK broadband, telephony and pay TV trends Q2 2017:Dead cat bounce [...]
ReportsUK residential communications market revenue growth bounced up to 3.6% in Q2, a full 1.4ppt improvement on the previous quarter and reversing the downwards trend of the previous two quarters. However, this was entirely driven by price rises at BT and Sky, with the ongoing market volume growth decline continuing at pace. In competitive terms, TalkTalk was the only operator able to improve its broadband net adds on a year earlier, and Virgin Media was solid with only a modest decline, leaving BT and Sky shouldering the worst of the slowdown, albeit with neither company doing particularly poorly given the market context. New customer pricing remains tight, with Virgin Media in particular becoming more competitive. Looking forward, we expect volumes to continue to slow, and for the pricing boost enjoyed in Q2 to largely drop out next quarter, leading to a renewed revenue growth slowdown.August 16, 2017Virgin Media Q2 2017 results: Mixed quarter, but still the faste [...]
ReportsVirgin Media’s subscriber figures in Q2 were a little mixed, with total homes and broadband figures weaker than a year earlier, but pay TV much stronger. ARPU growth fell though, largely due to price increase timing effects, leading to a modest dip in revenue growth. Project Lightning premises passed during the quarter rose to 127k, making at least some progress towards upping its run-rate after changing its roll-out management team and approach, the company declined to give indications of how this will evolve. The broader market context is still one of slowing broadband volume growth, and Virgin Media continues to take market share, being the fastest growing of the ‘big 4’ in both subscriber and RGU volumes
July 26, 2017European subscription and pay-TV monitor
ReportsAcross Europe, markets are becoming more competitive. Incumbent pay-TV paltforms (e.g. Sky or Canal+) face increasing threats from both internet-based services (e.g. Netflix and Amazon), and telecoms operators.Telecoms providers are proving the most potent challengers as they enter the premium football rights market to create attractive triple and quad play bundles – examples include BT, SFR and Telefónica. The latter is now the main pay-TV operator in Spain whereas France’s Canal+ has entered into a strategic alliance with Orange. Across the top five markets (UK, France, Germany, Spain, and Italy), Sky remains the leading operator with an estimated 21.5m video subscribers, twice as many as NetflixJune 27, 2017UK broadband, telephony and pay TV trends Q1 2017: Profit warning [...]
ReportsUK residential communications market revenue growth dipped modestly to 2.7% in Q1, from 3.3% in the previous quarter. This was mainly driven by ARPU weakness arising due to the timings of Sky and Virgin Media’s price rises, but weakness also stemmed from the sustained decline in broadband volume growth and continued new customer price competition.Looking forward, the implementation of an overlapping price increase from BT, as well as Sky’s price increases coming into full effect, should boost market revenues by around 1ppt in Q2 2017, but this will drop away again by Q3. The churn fallout from the communication of these price increases should also dissipate in Q2, benefiting BT and Sky competitively, and making it challenging for TalkTalk to repeat the feat of recovering to positive retail broadband net adds
June 10, 2017BT Q4 2016/17 results: Mobile strength, pressure elsewhere
ReportsBT had a reasonable quarter in its consumer broadband business given market pressures, and a very strong one at EE with continued growth acceleration. It had a good quarter for fibre adoption as well, helping its wholesale divisions stabilise their revenue, but business/IT was weak as expected.Regulatory pressure remains intense despite the (welcome) Openreach agreement, with price cap regulation proposed or due on a range of products, and a regulatory approach which is far from investment-orientated. Pressures in the business/IT market are likely to continue, and pressures in the consumer broadband market are likely to intensify, justifying BT’s current cautious approach to guidance and dividends.
May 19, 2017Virgin Media Q1 2017 results: Roll-out and competitive pressures
ReportsVirgin Media has run into network roll-out difficulties, having to revise down its previously stated homes passed figures and not committing to a full year 2017 target, with the current build run rate well below that required to hit its medium-term targets. Operating results were a little mixed, with ARPU showing signs of continued discounting and market-wide competitive pressures, and churn was higher than the previous year, but net adds were strong, RGUs stronger, and UK consumer cable revenue growth is still over 4%. Slower Project Lightning roll-out and weaker ARPU growth points to slower revenue growth during 2017 than might otherwise have been expected, but Virgin Media still has relatively strong prospects in a toughening market .February 24, 2017Virgin Media Q4 2016 results: Accelerated build, delayed benefits
ReportsVirgin Media successfully ramped up its network extension in Q4, passing more than double the homes in the previous quarter, and above the rate required to meet 2017 expectations. Net customer additions were, however, relatively weak, entirely due to extra churn caused by the price increase implemented in the quarter. The price increase’s effect on ARPU and revenue growth was muted by ARPU discounting for new customers, leaving revenue growth broadly unchanged. Subscriber growth has already improved in early 2017, and is likely to continue to improve through the year. The discounted ARPU impact will be more sustained, but robust revenue growth is still likely throughout the year.
February 23, 2016Lightning strikes: Virgin Media Q4 2015 results
ReportsProject Lightning is showing clear signs of success, running ahead of new premises targets with ARPU and penetration levels in line with expectations, which helped deliver the strongest organic RGU performance in over seven years, and could add c1% to revenue growth in 2016. Recent performance, though strong, was not immune to the rivalry of Sky and BT, with efforts to manage profitability in the face of inflated sports content rights costs in turn yielding tension at the subscriber level; we anticipate round two when the 2016/17 Premier League kicks off in August. Mobile revenue growth was relatively weak and quad play penetration fell, but the H3G/O2 merger in the UK may provide an option to improve its mobile wholesale deal, and the cable/mobile JV in the Netherlands with Vodafone points to a possible similar deal in the UK in the longer term.
April 27, 2015Media & Telecoms: 2015 & Beyond slides
ReportsEnders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides the accompanying slides for some of the presentations.
April 27, 2015Media & Telecoms: 2015 & Beyond
ReportsEnders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts from some of the talks, and you will find accompanying slides for many of the presentations here. Videos of the presentations are available on the conference website.
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