Australian MNO urban spectrum allocations by frequency band
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Source: ACMA, Venture Consulting analysis |
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Australian tower market 2020: drivers of tower and small cell demand
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The four phases of IoT development
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Source: Venture Consulting analysis |
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This report assesses the Australian mobile communications tower market and the drivers for tower and small cell demand in Australia. The rollout of 5G and renewed interest in small cell technology is an opportunity to reconsider the financing and ownership of potentially shareable infrastructure.
Tower sales make sense to promote MNO capital efficiency. As the focus of competition shifts towards capacity, it is prudent to shift capital away from towers to new investments
such as spectrum (and later small cells) that support capacity differentiation. From the tower buyer’s perspective, investment funds are seeking a real estate-type long
term, low payback, but low risk investment. We see significant upside if an Optus tower sale were to be followed by a TPG sale, leading to rationalisation of tower sites. Small cell growth is coming. Capacity demand will drive long-term growth in small cells, but not until macro-tower capacity saturates and new 5G enterprise applications
mature around mid-decade. Click here to request our report.
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CNNO Playbook: Crown Castle US
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Crown Castle: Total Revenue and Tower Revenue YoY growth rates (%)
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Source: Company quarterly reports; MTN Consulting analysis |
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Continuing our partnership with MTN Consulting, we are publishing a report of their series on Carrier Neutral Network Operators (CNNOs). If you would like to inquire about access to MTN’s full range of reports please contact us.
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The big three U.S. telcos (AT&T, Verizon and T-Mobile) have historically owned and operated their own towers. However, with rising debt and heavy costs involved in deploying the networks, the big three telcos spun off their tower assets to independent tower companies. AT&T and T-Mobile sold their tower business to Crown Castle; and Verizon disposed of its tower assets to American Tower. It was a win win situation for both the parties, as telcos could monetise their tower assets and pay off their debts. In exchange, tower companies could gain a long term customer. The exit of the big three telcos from the tower space led to the market dominance of American Tower, Crown Castle and SBA in the U.S. tower market segment.
This report covers Crown Castle’s latest earnings report, its tower and small cell strategies, its capex and M&A strategies, and the impact of regulation on its business. Click
here to request the report.
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Nine, Seven results: COVID disguises accelerating FTA revenue decline
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Half-yearly Australian Metro FTA ad revenue growth rate
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Source: company results, Venture Insights analysis |
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As we have said previously, the FTA advertising revenue market faces major structural headwinds as audiences transition away from linear television. Both Seven and Nine reported declines in their core FTA advertising businesses in FY19 and FY20. The decline in linear FTA advertising revenue in 1H20, before COVID-19 hit, was 7% YoY. This was an acceleration of the decline compared to FY19, but the effect was of course swamped by the impact of COVID-19 in the second half. As expected, COVID-19 had a disruptive and negative impact, particularly in Q4. This is reflected in the FY20 revenue results, but will flow through into FY21 because the longer-term economic impacts of COVID-19 shutdowns have yet to be felt.
To counter this trend and the one-off impact of COVID-19, Seven and Nine are managing the decline of the FTA market by following through with their investments in digital
platforms (BVOD), improving yields on existing content, developing programmatic and addressable TV solutions, and cutting costs. SevenWest and Nine were also able
to make gains in cost reduction and new revenue growth that kept them in the black. These green shoots give some hope for a digital rebound in the wake of the COVID-19
disruption. However, it will be several years before BVOD is enough to significantly offset FTA declines. Click here to request the full report.
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Fintech: Buy Now Pay Later sector performing strongly
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Australian BNPL market performance
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Source: company results, Venture Insights analysis |
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Australia’s BNPL sector has performed strongly since an initial fallout following the first wave of COVID-19. For the 3 months, share prices are significantly up including APT (58%), Z1P (19%) SZL (189%) and SPT (99%).
Notwithstanding some detractors, the share price performance reflects strong growth in online sales both in Australia and globally, and increased confidence in the Buy Now
Pay Later (BNPL) sector. Afterpay released its FY20 results, reporting strong growth in GMV (up 112% from $5.2b in FY19 to $11.1b in FY20) and Total Income
(up 103% from $247m in FY19 to $519m in FY20). Afterpay now has a market capitalisation of approximately $24b, making it the largest market cap of the ASX All Technology
Companies (followed by Rea Group with a market cap of $16b). A full interactive share price trackers and valuation multiple trackers can be found here.
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