Consumer broadband, telephony and pay TV market revenue growth plummeted to -6% in Q2 (from -2% in Q1), with all of the ‘big 4’ operators’ revenue growth taking a substantial hit. The reduction in premium sports channel revenue was by far the largest factor, with there being some other lockdown-related negative factors, such as the opportunity cost effect of extra services offered for free by the operators to help their customers during the crisis.
The good news is that the sport effect will largely disappear next quarter now that sport is back, although pubs and clubs revenue will be weak for some time.
However, underlying growth is still weak, largely due to backbook pricing pressure, which will likely get worse before it gets better as end-of-contract
notifications roll on and annual best price notifications start getting sent out in H2.
We expect growth to improve in Q3, but not return to a positive
figure. Broadband volume growth re-accelerated in Q2 after years of declining growth, and this was in spite of supply issues at Openreach, with Virgin
Media enjoying most of the improvement, with its best figures for years. This should accelerate further in Q3 with the Openreach supply issues behind us,
there will be room for an acceleration as mobile-only households return to fixed, and some adopt a second line for working-from-home. Click here to request
the full report.