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August 28, 2019Vocus: building their identity as an infrastructure business
Flash Report, ReportsOn 22nd August, Vocus announced its FY19 earnings. While Vocus delivered on its FY19 guidance, the outlook for the next 2-3 years remains subdued as Vocus faces an uphill battle to turnaround its business. Competitive intensity will continue to remain high across the consumer and enterprise segments. Therefore, how Vocus develops its infrastructure business will remain crucial.
August 27, 2019FTA earnings update – could digital save the TV star?
Flash Report, ReportsSeven West Media and Nine Entertainment reported their 1HFY19 earnings last week. Both broadcasters have been investing in ramping up their BVOD platforms along with offering advertisers addressable TV and programmatic advertising solutions while the outlook for their core FTA business remains challenging.
August 22, 2019VHA and TPG need a Plan B
Flash Report, ReportsThe ACCC has opposed the $15bn merger between TPG and VHA. In the ACCC’s view the proposed merger will reduce competition in mobile services as TPG would be precluded from becoming the fourth mobile operator. TPG has announced that it has ceased the rollout of its mobile network and will not become the fourth mobile operator. VHA now wants the Federal Court to find that the proposed merger is not anti-competitive, so the merger can proceed.
August 21, 2019Elephant in the room? No energy policy
Flash Report, ReportsOn 13 August 2019, Infrastructure Australia tabled a comprehensive Audit on Australia’s infrastructure across transport, water, energy, telecommunications and social infrastructure. The objective of the Audit is to take a user perspective of Australia’s infrastructure and create discussion around key challenges and opportunities. We believe the Audit is an excellent forum for lively debate around key issues that will have material impacts on Australians. We welcome the Audit and congratulate Infrastructure Australia on bringing this Audit forward and into the public domain for healthy and constructive debate. Venture Insights is a market-leading commentator on how technology disrupts the world we live in. We believe that technology can be a force for good and that if harnessed well can provide significant benefits to people. We call this the “technology dividend” and have focused on a number of key sector groups including digital media, telecommunications, finance, energy and health. In this report, we review the energy component of the Audit and provide some of our own views on what is being presented. The Audit was broken into 6 areas (which originated from the Finkel review): (a) Affordability and competitive prices; (b) Secure and reliable and sustainable energy); (c) Planning for our future energy networks; (d) New opportunities for community choice; (e) Delivering energy in remote communities; and (f) Harnessing Australia’s energy advantage. We respond in turn to each of these areas.
August 21, 2019What Amazon and Uber can learn from Chinese food delivery apps
Flash Report, ReportsOn 15th August 2019, Telstra announced its FY19 earnings. Falling ARPUs and NBN related impacts outweighed subscriber gains resulting in earnings declines. The Australian telco market remains competitive with nearly all sub-segments experiencing varying degrees of pricing pressure. Telstra as the market leader is most at risk as competitors increase share across different segments.
August 20, 2019Telstra FY19 earnings update: adjusting to a new normal…
Flash Report, ReportsOn 15th August 2019, Telstra announced its FY19 earnings. Falling ARPUs and NBN related impacts outweighed subscriber gains resulting in earnings declines. The Australian telco market remains competitive with nearly all sub-segments experiencing varying degrees of pricing pressure. Telstra as the market leader is most at risk as competitors increase share across different segments.
August 19, 2019Virgin Media UK: subscribers fall but ARPU grows
Flash Report, ReportsVirgin Media’s results were quite mixed, with the subscriber base shrinking in a very slow market, but ARPU and revenue returning to growth despite pricing pressure and regulatory drags. The outlook remains challenging, but market pricing does seem to be easing with no repeat of the damaging Openreach price cuts on the horizon. ‘Full fibre’ roll-outs will bring further challenges, but opportunities as well, with the accompanying focus on higher speeds likely to be a significant operational upside in the short to medium term.
August 16, 2019Sky UK Q2 2019 results: strong subscriber growth and long-term in [...]
Flash Report, ReportsSky’s Q2 results were encouraging overall, with significant subscriber growth swinging direct-to-consumer revenue growth back to positive. ARPU declined once more, since new streaming customers are taking lower-priced products, but total revenue growth accelerated to 2.4%. EBITDA rose 20%, primarily due to the dropping out of some large one-off costs. Next quarter, Sky will begin making savings on the new Premier League rights contract, and increased football rights costs in Italy and Germany will have annualised out. Having launched Sky Studios in June, Sky is focused on producing original European content, with ambitions to double spend over the next five years, in a calibrated response to the Netflix-led race for content.
August 15, 2019Finally, a long-term perspective – Infrastructure Australia [...]
Flash Report, ReportsInfrastructure Australia’s (IA) first audit in 2015 was the first national picture of Australia’s infrastructure challenges. IA’s second audit released in August 2019 seeks to identify challenges and opportunities across Australia’s transport, social infrastructure, energy, water and Telecommunications sectors. IA also considered the key future trends facing Australians as well as the direct views of infrastructure users across Australia.
August 14, 2019BT: Temporary problems, long-term promise
Flash Report, ReportsBT’s divisions had contrasting fortunes in Q1 2019/20, with Consumer revenue growth sharply turning negative but Openreach external revenue growth accelerating to 10%, leaving the Group level unchanged at -1% and EBITDA on course to meet guidance. Consumer was hit by several regulatory and pricing factors mainly affecting mobile, and the short-term outlook remains tough, with a number of legacy pricing issues across fixed and mobile still to be resolved. Openreach is reaping the benefit of previous price declines annualizing out, allowing it to take full advantage of higher speed demand, and due to its full fibre roll-out this dynamic could persevere for years.
August 12, 2019Netflix’s US subscriber loss
Flash Report, ReportsNetflix lost 126,000 US subscribers (net) in Q2, the first time this has happened since 2011 when there was a price rise and the Qwikster debacle. This time a price rise—of one or two dollars, depending on tier—was one culprit, but the soft release schedule of big, returning original series, which usually give a bump to subscriber additions, played a part. Q3 has those series returns in spades, with Stranger Things, Orange is the New Black, Money Heist and Mindhunter likely driving subscriber numbers back up, but the suggestion that there is less flexibility to raise prices than previously assumed is a worry for Netflix and incoming competitors.
August 9, 2019Optus 1QFY20 earnings update: 5G and Optus Sport will drive growt [...]
Flash Report, ReportsOn 8th August 2019 Optus announced its 1QFY20 earnings. Revenues were up driven by mobile handset sales and NBN migration payments, in spite of a drop in mobile service revenues and continued weakness in the enterprise segment. 5G and Optus Sport remain the key growth areas going forward.
August 5, 2019Vodafone UK: some signs of life but an uncertain road to recovery
Flash Report, ReportsVodafone’s newfound focus on performance improvement is showing signs of delivering – more on the cost than revenue side. Tower sharing has the potential to ultimately enhance European cashflow by 10%. The revenue picture is more mixed with churn improving but a very varied operational picture across its major European markets. Although Vodafone highlights the potential for German cable to drive growth post Liberty Global deal completion, their current 0.4% growth in Germany does not give cause for optimism
August 2, 2019O2 UK: Lower costs mitigate the challenging environment
Flash Report, ReportsO2’s service revenue growth slipped decisively into negative territory at -1.8% this quarter as the punishing regulatory regime took its toll. Underlying EBITDA growth of 4% was particularly impressive in the circumstances; likely aided by more direct distribution as well as tight cost control. The coming week will unveil how this compares to peers; we anticipate results which reflect a tough environment with little let-up on the horizon
July 31, 2019Neobanks: rapid growth or a slow burn?
Flash Report, ReportsRevolut’s recent Australian launch marks the first neobank taking on the local market, with several others waiting in the wings. Despite a willingness to consider using neobanks, particularly among younger consumers, we expect market share growth to be relatively slow as a result of low churn, a lack of trust and strong offerings from the incumbents.
July 30, 2019ACCC Digital Platforms Inquiry Final Report – much needed digit [...]
Flash Report, ReportsThe ACCC in its final report on the Digital Platforms has come up with a range of practical measures that could potentially help curb any anti-competitive behaviours from the tech giants. While the report focuses primarily on Google and Facebook, the ACCC has aimed to ensure that the recommendations are future-proof and adaptable to other digital platforms as the market evolves.
July 25, 2019Australian MVNO market overview – no longer just about price
Flash Report, ReportsAustralian MVNOs have reached a market share of 13% nationwide, as competitive MNO offerings now appeal to value conscious customers. New network technologies and the commoditised mobile industry are increasing the competitive intensity. Differentiation and cross selling will become increasingly important for MVNOs to build and retain market share
July 24, 2019TalkTalk UK Q1 2019/20 results: Slower but steadier
Flash Report, ReportsTalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017. The subscriber drop was, however, modest and looks quite deliberate, with there being evidence of price firming in both direct and indirect channels supporting both ARPU and margin. This more cautious approach, if it can be sustained, puts the company on a much more healthy footing in our view, allowing it to achieve its financial targets without increasingly unsustainable existing customer price rises
July 23, 2019How could the BBC ever fund the over-75s?
Flash Report, ReportsIn the BBC’s 2015 funding settlement commencing 2017, the Government assumed the BBC would fully fund the subsidy for over-75s to the tune of £750 million from 2020/21. Although the BBC’s settlement contained measures of “mitigation” worth c.£290 million, the BBC would still have faced a gap of c.£460 million to be funded by programme cuts and efficiencies (the BBC has pledged £250 million). Including c.£300 million from the annual adjustment of the licence fee for inflation from 2017 would help. However, this was always required to offset normal salary and cost increases to prevent a real decline in the BBC’s resources.
July 15, 2019Ad blocking update – Publishers and tech giants work togeth [...]
Flash Report, ReportsDigital publishers are using a variety of strategies to counter the impact of ad blockers from requesting users to turn off ad blockers or whitelisting websites to blocking access to content. Publishers have also found unlikely allies in Google and Facebook that are making it harder for third party ad blockers to block ads on their platforms.
July 11, 2019100% EVs by 2050
Flash Report, ReportsElectronic Vehicles (EVs) in Australia are forecast to reach 100% of new car sales within 15-20 years. EVs are an alternative to the internal combustion engine (or ICE) and use electric motors or traction motors for propulsion. ICE vehicles typically run on petrol or diesel and currently make up nearly 100% of the Australian private vehicle market. EVs are charged typically from the grid and as such source energy from both renewable and fossil fuel sources. Reduction in technology costs and the mass production will result in EVs having lower upfront and running costs which will lead to mass market adoption and ultimately replace the entire commercial market for private vehicles. In this report, we review the various factors driving the uptake of EVs, the way in which EVs will be charged, and the potential impact on residential homes’ production and consumption of electricity. As the market moves towards a distributed renewable market, EVs will increasingly be charged by cheaper renewable energy during off peak times when renewables are abundant in supply. We also review the cost of charging EVs (versus the equivalent cost for an ICE car) under various scenarios where a household charges its EV using grid electricity and using their own solar panels and batteries.July 10, 2019Google’s Icarus moment
Flash Report, ReportsGoogle’s advertising business has begun losing market share in the US, with competition from Amazon, Facebook and Microsoft intensifying in search and display. In response, the company is redoubling efforts to reshape its apps, services, and the entire web for more efficient monetisation, spelling uncertainty for partners and users. The adaptability and complexity of Google’s services reduce business risk from targeted regulatory measures, but increase the pressure for a radical intervention
July 8, 2019Roku: OTT pioneer under threat
Flash Report, ReportsWith c.22m accounts across 44m devices, Roku has a US footprint that exceeds the largest pay-TV platforms. Limited competitive advantages highlights the scale of this achievement, but also leave the pioneering firm vulnerable to activities from bigger, wealthier rivals Apple, Amazon, and Google as well as pay-TV providers. The odds are stacked against Roku, but continuing the innovation in production and product that built its lead may secure future success
July 5, 2019Vocus Strategy update: leverage fibre, subsea and mobile to build [...]
Flash Report, ReportsVocus held its strategy day on 3rd July 2019, detailing its efforts to turning around its business units. Its core Network Services and Retail units require substantial investment to stimulate revenue and market share growth. Vocus has identified mobile and its subsea cable assets as key drivers for growth. After two unsuccessful merger attempts in the last month, Vocus needs to ensure it can transform the company.
