• Mobile growth improved very marginally to -3.6% this quarter as roaming revenues were harder hit and competitive intensity bounced back, but usage recovered from the lockdowns in Q2 and cuts to intra-EU calls were annualised
• Italy’s fortunes took a turn for the worse as roaming hit particularly hard and Iliad resurged. After a spate of downgrades to the outlook last quarter, there were some tentative upgrades in Q3 although the tone remains cautious
• The diminished drag from roaming is the primary positive driver from here. Although lockdowns of some degree are in place in Q4, their impact will be less severe than those in Q2

Contents

Executive summary: steady now, brighter outlook

Reported and underlying revenue growth

Largely flat but a lot going on

Guidance edges up ever so slightly from Q2 lows

Telecom operators financial guidance detail

Vodafone overtakes its rivals…in some ways

Slow-pedal on German convergence begins to pay dividends

COVID-19 short-term impacts mixed but firmly negative overall

Mobile network performance resilient in the face of COVID-19

COVID-19 creates longer-term challenges

Second 5G auctions to take place in UK and Spain

Infrastructure sharing gears up to reduce costs and debt levels

Europe seems to be opting for less severe Huawei bans than the UK

Full annualisation of intra-EU calls cuts a 1-1.5ppts boost this quarter

End-of-contract notifications coming into force: a drag for most through 2021

Country analysis

UK: flat-lining but lots of moving parts

France: roaming hit hard, other fundamentals steady

Germany: O2’s revenues bounce back, net adds recover for all

Italy: roaming and a resurgent Iliad bite

Spain: post-lockdown bounce-back

Appendix

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

Mobile termination rates (MTR) impact de minimis

Reported mobile service revenue

Consolidation and convergence timeline

List of charts/tables

Reported mobile revenue growth—top 5 European markets*

Service revenue growth by market

Service revenue growth by operator group

COVID-19 related financial guidance changes (or lack thereof)

Mobile service revenue growth versus peers

Contract net adds in top 4 European markets

German converged customer net adds (000)

T-Mobile versus Vodafone contract ARPU growth

Anecdotal evidence of changes in data traffic

Europe average mobile network speeds (Mbps)

Europe ‘top 5’ GDP vs service revenue growth

Recent and forthcoming spectrum auctions

Spectrum auction results in Germany

Vodafone tower/network share deals

Approaches to Huawei across Europe

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

Potential drag from out-of-contract customers spinning down

Service revenue growth

Contract net additions (000)

Reported mobile service revenue growth by operator

Service revenue growth

Contract net additions (000)

Service revenue growth by operator

Service revenue growth

Contract net adds (000)

Service revenue growth by operator

Service revenue growth

Total subscriber net adds (000)

Service revenue growth by operator

Service revenue growth

Contract net additions (000)

Service revenue growth by operator

IFRS 15 effect of indirect and direct mobile contract distribution

BT/EE total revenue and service revenue growth (IFRS 15)

O2 total revenue and service revenue growth (IFRS 15)

Vodafone total revenue and service revenue growth (IFRS 15)

H3G total revenue and service revenue growth (IFRS 15)

Regulatory impact—top 5 European markets

European MTR rates (Euro cents)

Regulatory impact by market

Service revenue and service revenue growth

European MNO consolidation timeline