Choosing an LPWAN network for the long haul \ New Zealand Telco Market Outlook\ Webscale playbook: Tencent UK mobile market in Q2 2020 \ UK broadband, telephony and pay TV in Q2 2020

 

 



 

 

 

Welcome to the Venture Insights newsletter!
In this week’s edition, we look at the following:

 

  • IoT White Paper: Choosing an LPWAN network for the long haul
  • New Zealand Telco Market Outlook: COVID-19 turns a flat market negative
  • Webscale playbook: Tencent
  • UK mobile market in Q2 2020
  • UK broadband, telephony and pay TV in Q2 2020

 

 

 

 

CHART OF THE WEEK

 

 

Share of New Zealand UFB connections by speed



 

 

Source: Crown Infrastructure Partners

 

 

 

IoT White Paper: Choosing an LPWAN network for the long haul

 

 

The four phases of IoT development



 

 

Source: Venture Insights analysis

 

 

Interest and investment in Internet of Things (IoT) solutions is growing in every industry. IoT can cut costs, improve efficiency, and increase the visibility of industrial processes. It is not surprising that many companies and government agencies are now exploring IoT technology and developing use cases.

One option for IoT connectivity is a direct connection to the cellular mobile network. But increasingly, low power wide area networks (LPWAN) are preferred because of their cost, coverage and power advantages. Choosing the right LPWAN network is crucial to the long-term sustainability of an IoT strategy.
Venture Insights has prepared this White Paper for Telstra, laying out the buying criteria for LPWAN networks for organisations executing an IoT strategy. Click here to download our White Paper.

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New Zealand Telco Market Outlook: COVID-19 turns a flat market into a negative growth market

 

 

Total NZ telco market revenue by vertical (NZ$m)



 

 

Source: Venture Insights analysis

 

 

In our annual review of the New Zealand market, we forecast a negative-growth telecommunications market (2019-2023 retail CAGR -2.1%) over the next few years, with broadband growth offset by declines in mobile and fixed voice. We expect COVID-19 to have a positive impact on fixed broadband but a negative impact on mobile.

Our consumer survey research also shows underlying consumer resistance to mobile price increases. An economic downturn will only exacerbate this resistance, limiting the mobile operators’ ability to capitalise on 5G investment.
With UFB deployment nearly complete and the launch of 5G and Hyperfibre, we expect a rise in competitive intensity in the fixed market as players look to capture share across a broader set of product offerings. Fixed voice continues its structural decline as subscribers shun the landline and migrate to mobile bundles and broadband + VOIP bundles. Click here to request the report.

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Webscale playbook: Tencent

 

 

Tencent revenues: 1Q19 – 2Q20



 

 

Source: Company quarterly reports; MTN Consulting analysis

 

 

Continuing our partnership with MTN Consulting, we are publishing their next report of a series on Webscale Network Operators (WNOs). WNOs are web-centric companies whose operations and services rely heavily on hyperscale data centres and supporting connectivity. They typically have tens or hundreds of millions of customers/users and rely heavily on scale and network effects in their quest for profitable growth. This report analyses the network infrastructure spending and financial position of Tencent. If you would like to inquire about access to MTN’s full range of reports please contact us.

Enquire about MTN reports

 

 

Tencent’s meteoric rise into one of the leading internet businesses coincides with China’s internet boom that started at the end of 20th century. According to the ITU estimates, just ~1.8% of China’s total population were internet users in the year 2000 – two years after Tencent was founded – that has now exploded to about 64%. Tencent’s initial journey began with the desktop-based instant messaging offering, QQ (initially QICQ), which slowly gained popularity and provided the company with a strong footprint in the domestic market. The start of the new decade saw more users going mobile with the increased cellphone penetration in the country, which led Tencent to launch its popular mobile instant messaging app, WeChat (Weixin in China) in 2011. Click here to request the report.

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UK mobile market in Q2 2020 – recovery interrupted

 

 

Reported UK mobile service revenue growth



 

 

Source: Enders analysis, company reports

 

 

The UK mobile industry was hit harder than expected by COVID-19, with service revenues declining by 7% overall vs a decline of just 1.6% in the previous quarter. Many telecoms operators across Europe have become more negative on the near-term outlook than they were a couple of months ago, with full year guidance now downgraded by almost all players.

5G rollout has been hindered by planning permission delays and restrictions on access to sites during lockdown. The decision to ban Huawei from all mobile networks by 2027 will also delay rollout both near and medium term with the government’s 2-3 year delay claim a reasonable assessment in our view. Delays and some uncertainty around the next 5G auction, now scheduled for January 2021, are not helping either. With continued strong volume growth, the operators will experience diminished headroom for capacity as 5G rollout becomes more protracted than expected. Click here to request the full report.

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UK broadband, telephony and pay TV trends Q2 2020

 

 

UK fixed Consumer revenue growth by operator



 

 

Source: Company reports, Enders Analysis

 

 

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.

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