Baby steps to recovery – European mobile in Q4 2019

Report Overview

Baby steps to recovery – European mobile in Q4 2019

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Baby steps to recovery – European mobile in Q4 2019
European mobile service revenue growth improved by 1ppt to -1.2% primarily as a consequence of diminished competitive intensity in France. Trends elsewhere were largely flat
The mobile sector is playing an important role in tackling COVID-19 and is likely to be relatively resilient in the short term with a broadly neutral financial impact. Longer term it will be exposed to the fortunes of the economy
There are reasons to believe that the improvement in trends evidenced in the last quarter may continue as churn reduction takes the heat out of some markets, cuts to intra-EU calls annualises out and for most countries, end-of-contract notifications will only begin to impact in 2021

Contents

Executive summary—baby steps to recovery

France boosts the European trend—flat-lining elsewhere

Vodafone subscriber acquisition rate scaled back

Vodafone moving away from German convergence strategy?

COVID-19 network impact: challenging, but some resilience likely

COVID-19 financial impact: resilience again likely

Mobile operators gifts to customers to assist with COVID-19 impact

5G roll-out likely to be somewhat slowed by COVID-19

Revenue trends driven by shifts in with-handset bundles and means of distribution

IFRS 15 revenue trend distortions

UK operator performance: neither service nor total revenue growth are perfect measures

German operator performance: neither service nor total revenue growth are perfect measures

Huawei restrictions very mixed

Intra-EU calls cuts a drag for one more full quarter

Infrastructure sharing gains in popularity

End-of-contract notifications a drag for most through 2021

UK—no real uptick

UK—nearing the end of the headwinds

France—convincing bounce back

Germany—O2 leads on subscribers but revenue growth dips

Italy—continued shift to value hinders the recovery

Spain—a slow but steady recovery begins to emerge

List of charts/tables

Reported mobile revenue growth—top 5 European markets

Service revenue growth by market

Service revenue growth by operator group

Mobile service revenue growth versus peers

Contract net adds in top 4 European markets

T-Mobile versus Vodafone contract ARPU growth

Change in customer lifetime contribution due to converged bundle

Anecdotal evidence of changes in data traffic

Peak complaints about network service per 15 minutes in the UK

Europe ‘top 5’GDP vs service revenue growth

Mobile operators gifts to customers to assist with COVID-19 impact

Recent and forthcoming spectrum auctions

Spectrum auction results in Germany

IFRS 15 effect of indirect and direct mobile contract distribution

UK operator performance: neither service nor total revenue growth are perfect measures

German operator performance: neither service nor total revenue growth are perfect measures

Approaches to Huawei across Europe

Intra-EU calling prices –Euro cents per minute prior to cuts

Vodafone tower/network share deals

Potential drag from out-of-contract customers spinning down

Service revenue growth

Contract net additions (000)

Reported mobile service revenue growth by operator

Outlook for change in mobile trends in 2019 by operator