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July 3, 2019Transforming the live sports experience – it’s game on for 5G
Flash Report, ReportsMajor sports codes in Australia are trying to figure out how to engage and attract younger fans, and they are looking to technology not only to gain and retain fans but also to get fans into the stadium. Technological development is rapidly changing almost every facet of the business of live sports and as sport changes both on and off the field, innovation has become a key priority for all industry stakeholders.
June 25, 2019European mobile in Q1 2019: Toughest conditions in four years
Market Outlook, ReportsEuropean mobile service revenue growth slipped again to -2.0%; its worst performance in four years.Regulation limiting intra-EU call prices could hit hard next quarter – with the UK likely to be hardest hit by up to 6% of revenues and 20% of EBITDA. Excluding the EU-call impact, we see greatest scope for improving trends in Italy and France thanks to easier comps and diminishing competitive intensity.
June 20, 2019Network Slicing – business transformation opportunities from me [...]
Flash Report, ReportsNetwork slicing is a key feature of 5G networks, allowing MNOs to allocate independent virtual networks to customers with specific capabilities and quality of service guarantees. In addition to improved performance, network slicing will create new business models that will bring new revenue streams for MNOs. There are a range of opportunities across media, gaming, emergency services, IoT, transport and MVNO market segments.June 18, 2019UK broadband, telephony and pay TV trends Q1 2019: Price wars dom [...]
Market Outlook, ReportsMarket revenue growth dipped to around zero in Q1, with fierce competition on new customer pricing the major factor. All four of the big operators now suffer from declining ARPU, with existing customer price rises increasingly hard to land given falling prices for new customers. The rapid move to superfast is not helping as much as it should; the operators will hope that they fare better with the move to ultrafast.
June 17, 2019UK mobile market Q1 2019 – Pressure to mount after mixed bag in [...]
Flash Report, ReportsThe UK mobile market posted its slowest growth in more than two years this quarter; just 0.5% service revenue growth although net adds were strong and churn was down. ARPU is under considerable pressure thanks to regulation limiting out-of-bundle spend which will exacerbate as the year progresses. Several other negative developments look set to be layered on the pressures this quarter, including a step-up in competitive intensity as 5G launches – with H3G’s pricing of unlimited data a sign of a resurgence in its aggression
June 13, 2019O2 UK: holding its own in toughening conditions
Flash Report, ReportsAfter a period of significant outperformance, O2’s Q1 results reverted to sector average revenue growth with ARPU down by 3% and all of the growth coming from ‘other’ revenues. Regulation limiting out-of-bundle spending has been a significant drag which will continue to worsen. A more competitive market and a punishing regulatory outlook will make it very challenging to sustain 2018 growth trends as this year progresses
March 4, 2019MWC – all very exciting but where’s the money?
Flash Report, ReportsThe combination of 5G, AI, IoT and big data were evangelised at MWC as generating massive scope for the transformation of multiple industries. That much is probably true, but it is the tech and consultancy companies who will likely receive the benefits, with connectivity revenue likely to be modest. For the operators, 5G brings more capacity much needed for hungry smartphone users, and perhaps the opportunity to transform themselves into a leaner operating model.
February 6, 2019New Zealand Mobile Market Outlook
Market Outlook, ReportsThe New Zealand mobile market had been traditionally characterised as an oligopoly that is dominated by the prepaid segment with high prices, lack of product differentiation and low usage. However, this market is about to see a rise in competitive intensity driven by 2degrees’ move to gain share in the lucrative postpaid and business mobile segments. We believe Vodafone NZ is most at risk and could lose approximately 3% of its subscriber market share by 2022. The emergence of utility companies offering mobile products will also increase competition and create more “sticky” consumers. We forecast the mobile market will remain the largest segment in the telco market with NZ$3.2bn revenue by 2022.
January 17, 2019Apple and Amazon bury the hatchet
Flash Report, ReportsAmazon’s recent deals with Apple in TV, music and device sales mark a turning point after a decade of frosty relations. The context for this involves shifting priorities at both firms, growing pressure on Apple’s iPhone business, and rivals in common — first and foremost Google, but also the likes of Netflix and Spotify. The uneasy alliance helps both companies consolidate their strengths in the platform competition over media and the connected home — but trouble already brews.January 9, 2019European mobile in Q3 2018
Market Outlook, ReportsEuropean mobile service revenue growth slipped again this quarter to -1.0% as the UK and Germany disappointed and the Southern European countries worsened. The gap in service revenue growth rates between the Southern European countries and the UK and Germany increased again to a spectacular 5.5ppts. Spain was perhaps the biggest surprise this quarter with service revenue growth deteriorating by more than 3ppts; primarily due to Vodafone who posted a dire performance on all fronts. Next quarter, a somewhat delayed improvement in trend from the annualisation of roaming tariff cuts in the UK and Germany is possible, competitive intensity in France looks set to intensify as Iliad renews its aggression in the face of slowing momentum. Although there may be some reprieve on the rate of subscriber loss in Italy, Iliad is likely to continue to impose significant ARPU pressure on all operators.
December 5, 2018TalkTalk stabilising, but strong growth evasive
Focus Report, ReportsTalkTalk had very solid Q2 and H1 results, with broadband net adds staying positive, high speed net adds accelerating, revenue growth above 3% and EBITDA rebounding back to growth. This was helped at the revenue line by a price increase in the quarter and in EBITDA terms by steep Openreach price reductions, with strong revenue growth and any EBITDA growth hard to replicate once these effects have annualised out. The company has nonetheless stabilised its subscriber base, revenue and profitability after some erratic years, with cost-cutting providing some potential for growth going forward.
November 19, 2018Australian Mobile Telco Market Outlook
Market Outlook, ReportsThe Australian mobile market has been traditionally characterised as a mature market with steady growth driven by population growth and mobile broadband. However, this market is about to see strong innovation (5G) and disruption (TPG-Vodafone merger) in the next few years. We forecast the mobile market will remain the largest segment in the overall telco market with A$22.3bn in revenue by 2022. With the merger between TPG and Vodafone to form a third full service telco in the market, we expect the competitive intensity to increase with incumbents facing pricing and margin pressure from 2018-19 onwards. However, despite TPG’s aggressive initial pricing and service offering, at this stage we have been conservative in our estimates with respect to TPG-Vodafone’s impact on incumbent market shares as we expect a gradual subscriber take-up of the network over 2018-2022. The arrival of 5G and emergence of wireless access to the Internet as an alternative to fixed broadband means that the mobile market will continue to experience strong growth, with ARPUs steadying. Venture Insights believes that 5G coupled with IoT will enable the transition from a connectivity based revenue model to a services based revenue model for mobile operators.
November 1, 2018Australian Telecommunications Market Outlook
Market Outlook, Reports- The introduction and the rollout of the NBN has been one of the key inflection points in the Australian telco market. However, as the rollout progresses, complaints continue and the tug-of war with RSPs over CVC charges continues. This discord has led to both major and smaller RSPs experiencing a tight squeeze on margins and opportunities for bypass options
- The Mobile segment continues its upward march but the market is about to see the impacts of a new wave of innovation (5G, IoT) and disruption (TPG Vodafone merger) in the next few years. This will severely impact fixed line broadband and nbn’s business case
- The merger between TPG and Vodafone will create a strong third MNO in Australia and long term competition and pricing pressure with Optus and Telstra
- Growth and broader acceptance in public cloud solutions is driving growth in the data markets as the corporate market is increasingly consolidating their voice, data and applications traffic
October 31, 2018US department stores, Amazon, and omnichannel fashion retail
Market Outlook, ReportsAmazon is finding women’s fashion, a missing piece of its household-centric model, a tougher nut to crack than downmarket apparel. Higher-end US department stores are pushing back with an omnichannel model, emphasising long-term partnerships, a clever full-price/outlet model, and experiences which cross the online-offline divide. In apparel, Amazon and big box retailers have already triumphed over lower-tier American department stores, and even prestigious fashion brands are finding it harder and harder to refuse cooperation with the giants.
September 17, 2018UK Broadcast TV is growing very old, very quickly
Market Outlook, ReportsUK mobile market service revenue grew by 1.7% in Q2, up from 1.3% in the previous quarter, a disappointing result in the context of boosts from both IFRS 15 accounting and the annual price rises in the quarter. O2 was the star performer this quarter, with its service revenue growth leaping ahead to claim the top spot. BT/EE’s service revenue growth declined on an underlying basis, with weak contract net adds over the last six months catching up with it, and H3G and Vodafone were slightly improved and steady respectively excluding some one-off effects. Next quarter, the impact from the EU roaming cuts will annualise out, providing a substantial fillip to all operators. Ceteris paribus, this would put market growth in the vicinity of 4%, a figure not reached for years.
September 11, 2018UK mobile market Q2 2018: Disappointment before dawn
Market Outlook, ReportsUK mobile market service revenue grew by 1.7% in Q2, up from 1.3% in the previous quarter, a disappointing result in the context of boosts from both IFRS 15 accounting and the annual price rises in the quarter. O2 was the star performer this quarter, with its service revenue growth leaping ahead to claim the top spot. BT/EE’s service revenue growth declined on an underlying basis, with weak contract net adds over the last six months catching up with it, and H3G and Vodafone were slightly improved and steady respectively excluding some one-off effects. Next quarter, the impact from the EU roaming cuts will annualise out, providing a substantial fillip to all operators. Ceteris paribus, this would put market growth in the vicinity of 4%, a figure not reached for years.
August 30, 2018IoT in Transport – rise of the connected transport market
Focus Report, ReportsThe Internet of Things is set to transform the transport industry by driving real-time connectivity between vehicles and transport infrastructure. In Australia, the transport IoT market is forecast to generate about A$5bn in revenue in the next five years.
August 20, 2018Sky UK 2017/18 full year results: Winning the game of content
Focus Report, ReportsSky maintained strong revenue growth of 5% in 2017/18, with EBITDA and operating profit both bouncing back into strong positive territory after the UK Premier League rights hit of 2016/17. The UK grew revenue well and profits better; Italy performed well and should improve much further given the retreat of its principal competitor; Germany is more challenged, but extra content investment may aid sustained growth. Sky is proving adept at managing content costs and revenue in a changing environment, with investment, cost control and monetisation all being put to effective use as the content type demands it.
August 7, 2018BT Q1 2018/19 results: On target in the short term, making progre [...]
Focus Report, ReportsBT’s Q1 results were fairly robust given a number of one-offs hitting in the quarter, with revenue growth of -2% in line with full year guidance, EBITDA growth of 1% ahead of plan, and a number of metrics looking promising. Openreach’s newly announced volume discount plans offer advantages in growing high and higher speed volumes, infrastructure competitiveness and regulatory pricing pressure, while giving up little in external revenue, a win-win-win for BT at least. Full-fibre regulation appears to be slowly moving towards more clarity, but is still far too unclear to justify an accelerated investment, with critical issues being ducked (for now) by government and Ofcom alike.
August 2, 2018Revenues down, guidance in the balance: Vodafone Q1 2018/19 resul [...]
Focus Report, ReportsEBITDA growth guidance of 1-5% is in question with group revenues flat to down. Counting AMAP growth in local currencies helps, as will cost control and roaming relief. Sustaining growth in Germany will be key; convergence-led ARPU declines could prove to be something Vodafone can’t afford. Vodafone’s UK business performed strongly in terms of mobile subscribers and fixed business financials, although revenue growth is still lacklustre. Profitability is expected to increase markedly, boosted 10ppts by roaming tariff relief. Although we view Iliad’s business model in Italy as unsustainable, it will nonetheless continue to put significant pressure on Vodafone Italy’s ARPU, which is almost three times that of Iliad’s package.
July 26, 2018The drive for convergence: a value-destructive strategy
Focus Report, ReportsMany European telecoms operators are pursuing a fixed/mobile convergence strategy on the pretext that the addition of mobile reduces churn. We see no evidence of churn reduction from this strategy. Discounts required to encourage take-up of fixed/mobile services are often value-destructive, even before competitor reaction: a 10% bundle discount necessitates a 2ppt improvement in churn to wash its face economically. M&A premia on the basis of convergence synergies raise the hurdle even higher. Most UK operators offer very limited discounts on fixed/mobile bundles for now, sensibly focusing on enhanced services. Vodafone is the most aggressive, albeit less so than it is elsewhere. All UK players should hope that it stays this way.
June 20, 2018European mobile in Q1 2018: North–South divide to exacerbate
Market Outlook, ReportsIn this report we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or incomplete, and we have updated previous period figures where better information has come to light. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.
June 19, 2018Advertising after the turning point: When offline is the exceptio [...]
Market Outlook, ReportsOnline advertising became the majority of all UK ad spend last year, in step with China but ahead of all other major markets. Direct response has further increased its share to 54% of UK ad spend, fuelled by the self-serve platforms of Google, Facebook and Amazon, while content media nets just 11% of the online advertising pot. We estimate that all online-delivered channels - including "pure play" online properties, broadcaster VOD, digital out-of-home and online radio - could account for well over 60% of UK ad spend by 2020, but only with improved commitment to industry governance.May 30, 2018BT new Consumer strategy: Converging, but in a good way
Flash Report, ReportsBT has emphasised ‘convergence’ in its new Consumer strategy, but it has avoided most of the usual fixed-mobile convergence mistakes, with separate brands, minimal discounting and only slightly flawed converged products. The general strategy is to improve customer service to improve market share trends (particularly in broadband), enable premium products/positioning, and allow for cross-selling of a strong set of converged (in a broader sense) products, which is very sensible in our view. It does require extra spending in the short-term to improve customer service and the perception thereof (particularly in broadband) before premium positioning and cross-selling can be effective, therefore improved trends at the bottom line may take some time to come through.
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