UK mobile market Q3 2019: Weathering the storm

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UK mobile market Q3 2019: Weathering the storm

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UK mobile market Q3 2019: Weathering the storm
The UK mobile market suffered its worst performance in six years this quarter as competition heated up and regulation continued to bite
Vodafone’s unlimited tariffs have proven popular, reaching 5% of its contract base in one quarter, helping to drive its outperformance
Some reprieve is in prospect next quarter, before the impact of out-of-contract notifications and automatic discounts from February, although there is the possibility of pre-emptive moves bringing some of the effects forward


Executive summary – Weathering the storm

Market and competitive trends

  • UK mobile market – yet another dip
  • Competitive performances – all the major players hit
  • Net adds – Vodafone to the fore
  • Churn edges up
  • Another ARPU drop
  • Pricing – SIM-only flattening out and mid-tier packages in short supply
  • Unlimited packages gaining traction
  • Unlimited plans drive Vodafone volumes
  • Financial performance: patchy disclosure, divergent momentum
  • Complaints – Vodafone improving but still the worst by far
  • 5G to ramp up rapidly but H3G mobile 5G launch delayed
  • 5G launch to ease capacity constraints
  • Spectrum auction now without coverage obligations
  • Rural coverage – operator-led solution now with some government support

Emerging headwinds

  • Ticking off the headwinds
  • Out-of-bundle pressure continues to mount
  • Contract price rises a diminished boost
  • Annual licence fees pop up again – a drag on EBITDA
  • Full drag from intra-EU calls this quarter
  • End-of-contract notifications a potential hit to EBITDA
  • Automatic discounts as a backup


  • IFRS 15 reporting note
  • Zero-rating
  • Previous contract price increases for existing customers
  • Spectrum

List of charts/tables

Reported mobile service revenue growth

UK mobile market net adds (000s)

Reported mobile service revenue growth by operator

Contract net additions (000s)

Annualised contract churn

Contract gross additions share

Contract ARPU growth

SIM-only share of contract

‘Sweet spot’ bundle with iPhone 6s/7/8/XR/11

SIM-only pricing by data allowance (GB)

SIM-only unlimited data pricing (£/month)

Data volume growth by operator

Data volume growth vs. data usage per smartphone

Capex by operator, last 6 months (£m)

EBITDA margin by operator, trailing 12 months

Cashflow (EBITDA-capex) margin by operator, last 12 months (£m)

Pay monthly mobile complaints per 100,000 customers

Telecoms industry complaints per 100,000 customers

5G launch dates and plans

Spare capacity per operator (PB per year)

Timeline of UK mobile capacity

Spectrum holding by operator (MHz)

Landmass 4G coverage, 2018

Outlook for change in mobile trends in 2019 by operator

Operators’ restrictions on out-of-bundle spending before new regulation

MNO price increases

RPI-linked price increases in 2018 vs 2019

Annual licence fees (£m per MHz per annum)

Drag from ALF change on EBITDA (excluding H3G 5G spectrum)

Bolt-on offers for international calls from mobiles

Potential drag from out-of-contract customers spinning down

Potential drag from discounting customers out of contract for >3 months

UK zero-rated data offers

Select previous MNO price increases

Mobile network operator spectrum ownership (both up and down MHz)