June 30, 2015 Reports
BT will soon for the first time charge the majority of viewers for their own channels with the launch of the BT Sport Pack. The Pack includes BT Sport Europe, home to UEFA’s European football tournaments from this August, the rights to which BT are paying £299 million a year. Viewing figures for the big European tournaments are not as high as one might expect given their prominence. Consumer demand for the new channel will also be highly dependent on the success of British teams, notably lacking in recent seasons. We therefore do not expect a dramatic impact on BT Sport (or BT broadband) subscribers, and the widening losses will put pressure on BT’s margin squeeze test regulation, although they are easily absorbable at BT Group level.
BT will soon for the first time charge the majority of viewers for their own channels with the launch of the BT Sport Pack. The Pac [...]
June 25, 2015 Reports
European mobile service revenue growth improved once more in Q1, rising 1.1ppts to -1.6%, continuing a trend of underlying growth improvement that started in Q3 2014. The improvement was mainly driven by easing declines in France and Italy but deteriorating performance in Spain meant that Europe-wide growth did not improve by as much as in the last two quarters. Pricing stabilisation appears again to be the main driver of recovery (in those countries that are recovering) with more rational pricing allowing operators to monetise rapid data usage growth. However, more price cut moves have been made in France since the end of the quarter, Italy remains an inherently unstable market and Spain again suffered this quarter from convergence discounts. As data usage continues to grow rapidly, customer concern for high quality data networks increases, which makes investment in superior 4G networks a clearer differentiator for operators to convey to customers. The UK market leads the EU5 in this regard, and has taken advantage through rationally priced tiered data plans, but this effect spreading to the rest of the EU5 is a source of optimism as 4G roll-outs continue across Europe.
European mobile service revenue growth improved once more in Q1, rising 1.1ppts to -1.6%, continuing a trend of underlying growth i [...]
June 24, 2015 Reports
The UK broadband market remained strong in Q1 2015, backed up by healthy volumes, with a modest weakness in ARPU causing revenue growth to slow to 4.5% from 5.7% in the previous quarter. ARPU growth was particularly weak at BT and Virgin Media, with part of this due to one-off factors, but part due to the dilutive effect of increased promotional activity. Broadband volumes continued to modestly accelerate, pay TV volumes modestly decelerated and line rental growth levelled off. The highlight was high speed broadband, with market net adds continuing to rise, driven by increased marketing and BT’s roll-out reaching more rural areas where the speed improvement is more marked. Since the end of the quarter, Vodafone launched a new consumer dual play product. Launch pricing is at the bottom end of the current price curve, but not well below it, suggesting that it is wisely imitating EE’s approach of cross-selling a profitable product as opposed to deep discounting on broadband to build mobile market share
The UK broadband market remained strong in Q1 2015, backed up by healthy volumes, with a modest weakness in ARPU causing revenue gr [...]
June 18, 2015 Reports
Apple has confirmed the launch of Apple Music, its streaming music service, available on iOS devices by the end of June, and later on Android. Priced at the same level as Spotify’s premium tier and lacking a free ad-supported offer, much hinges on the appeal of its curation tools. Other key announcements included a news app, the roll-out of Apple Pay to the UK, improvements to maps, and new operating systems for Mac, iPhone/iPad and Watch. The main theme was one of increasing intelligence in services, with Music and News both being curated and the software getting better at understanding and predicting user needs. This is a necessary step to prepare for the next wave of consumer technology: wearables and connected devices.
Apple has confirmed the launch of Apple Music, its streaming music service, available on iOS devices by the end of June, and later [...]
June 17, 2015 Reports
UK mobile service revenue growth continued to improve, rising to 1.2% in Q1, a modest figure but still the best of the five largest European mobile markets, albeit weaker than the UK consumer fixed line market (4%-5%). O2 continued to be the strongest grower of the ‘big 3’, and maintained over 40% share of contract net adds. Both Vodafone and EE appear to have suffered from the demise of Phones 4U, having been its biggest (and latterly its only) network operator suppliers. EE is also suffering from the gradual withdrawal of its Orange and T-Mobile brands, which is forcing it to work harder to both attract and retain customers. Vodafone launched a competitively priced consumer fixed broadband offer on 10 June. EE has shown that there is an opportunity for Vodafone to have some limited success cross-selling broadband through its shops, but O2's mobile-only success and EE's struggles in its mobile business suggest that this will not drive improved mobile performance
UK mobile service revenue growth continued to improve, rising to 1.2% in Q1, a modest figure but still the best of the five largest [...]
June 5, 2015 Reports
The latest numbers for Q1 2015 show strong device and internet user growth, with more of the population online than ever before, including more than 90% of under-55s. Growth amongst older groups, however, has slowed to a crawl. Participation in online activities is up across the board, but digital media data shows spend on ebooks and digital music struggling, with the latter being heavily impacted by the rise of unlimited streaming models such as Spotify. The story of mobile's surge continues, with almost a half of e-commerce transactions and a third of search and display ad spend now going to mobile. Most of these mobile devices are Android, but iPhone seems to have gained long term share with its larger phones. Google services, however, have cross-platform reach.
The latest numbers for Q1 2015 show strong device and internet user growth, with more of the population online than ever before, in [...]
June 4, 2015 Reports
Vodafone Europe’s revenue growth improved again in the March quarter, but not by as much as the previous trend, or by as much as the mobile market in general. Operational trends look more solid, with data growth continuing to accelerate and Project Spring delivering improvements in some markets. The biggest blip was in Germany, a quad play market for Vodafone, and we remain sceptical of the operational benefits of convergence as Liberty Global merger speculation re-surfaces.
Vodafone Europe’s revenue growth improved again in the March quarter, but not by as much as the previous trend, or by as much as [...]
May 29, 2015 Reports
TalkTalk accelerated subscriber and revenue growth in the March quarter, but stripping out the effect of acquisitions we estimate that organic growth was roughly in line with the previous quarter. Its EBITDA grew 15% for the 2014/15 financial year, but margin expansion reversed in H2, with lower gross margin and higher broadband marketing costs causing the damage. The company’s 25% EBITDA margin target in 2016/17 continues to look challenging, but continued strong revenue growth and some margin expansion looks likely.
TalkTalk accelerated subscriber and revenue growth in the March quarter, but stripping out the effect of acquisitions we estimate t [...]
May 27, 2015 Reports
Virgin Media’s subscriber trends were a little weak in Q1 compared to previous trends, with intense promotional activity from competitors hurting, but it still expanded its base. ARPU was also relatively weak due to various VAT and pricing changes, but it still grew, leading to cable revenue growth of 3% versus 4% in the previous quarter, and OCF growth of 5% versus 9% in the previous quarter. This growth level is likely to accelerate over the year as subscriber momentum improves and one-off effects annualise out, with the benefits of footprint extension mainly impacting from 2016.
Virgin Media’s subscriber trends were a little weak in Q1 compared to previous trends, with intense promotional activity from com [...]
May 19, 2015 Reports
BT had a somewhat mixed March quarter, with growth in consumer still strong but weaker than before, growth in UK corporate weak and even weaker than before, but fibre growth re-accelerating and cost-cutting very strong. The company is still well on track, with 2015/16 revenue guidance reflecting fibre-driven consumer growth countered by UK corporate weakness, and EBITDA guidance reflecting strong cost-cutting partially mitigated by extra football rights costs. Operationally the next few months will likely be dominated by the launch of BT’s Champions League coverage and associated marketing, with various regulatory processes keeping the company busy at the strategic level
BT had a somewhat mixed March quarter, with growth in consumer still strong but weaker than before, growth in UK corporate weak and [...]
May 6, 2015 Reports
EE reported improved mobile service revenue growth in Q1 but it is still shrinking at -1.7%; a disappointing performance now that all of its competitors have moved back into growth. The main causes of its underperformance appear to be the impact of the gradual retirement of the Orange and T-Mobile brands, and the loss of sales from Phones 4U which closed last year, with differentiation through superior 4G not (yet) able to make up for these factors. EE’s fixed line business was the star of the quarter with 50k customers added and 15% revenue growth. It seems to have cracked the formula of cross-selling broadband into its mobile base, a useful skill in the current market context.
EE reported improved mobile service revenue growth in Q1 but it is still shrinking at -1.7%; a disappointing performance now that a [...]
April 30, 2015 Reports
The UK’s three main Westminster parties converge on sustaining the dynamic growth of the digital economy and the vibrant creative industries. The biggest area of divergence is on the EU. The Conservatives plan to hold an “in-out” referendum by 2017, while Labour and the Lib Dems are pro-EU and plan to engage with the Digital Single Market. Other important areas of disagreement include the future of the BBC and the Licence Fee, press regulation and reform of media plurality policy.
The UK’s three main Westminster parties converge on sustaining the dynamic growth of the digital economy and the vibrant creative [...]
April 27, 2015 Reports
Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides the accompanying slides for some of the presentations.
Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The even [...]
April 24, 2015 Reports
Sky plc has produced a strong first quarter across its three markets in terms of subscriber growth, record low churn and continuing firm control over costs, which has contributed to a 5% increase in revenues and 20% increase in operating profit over the first nine months of fiscal 2015. As expected, practically all the retail customer growth in Q3 occurred in the UK & Ireland and in Germany & Austria. Nevertheless, the results were also positive in Italy, as it registered the highest net customer increase in 3 years and record low churn. It is still too early to judge the success of the Sky plc strategy in terms of synergies, innovation and content origination. Whilst the potential appears great, the imminence of the next Bundesliga auction is a reminder that the issue of sports rights inflation is unlikely to disappear even after the latest PL auction.
Sky plc has produced a strong first quarter across its three markets in terms of subscriber growth, record low churn and continuing [...]
April 20, 2015 Reports
There are still two and a half weeks of the campaign to go before polling day, but postal votes are already being sent out to voters and many have already made up their minds. We believe there is now a small range of likely seat outcomes, and therefore possible governments. Our central case sees the two main parties almost level on seats, resulting in a Labour minority government dependent on the support of the SNP and its allies (the Greens and Plaid Cymru). Slightly different outcomes are also possible, depending on the final size of the swing from the Conservatives to Labour in England and Wales, over which there is still considerable uncertainty. If Labour does worse than we expect, it could require the votes of the Lib Dems as well as the SNP; if it does better, it could require only Lib Dem votes. The upside case for the Conservatives is now that they win enough seats to make a minority government dependent on the support of the Lib Dems, DUP and UKIP possible. We think that scenario is now unlikely, but even if it were to occur, we think it would be very challenging to both knit those parties together and persuade the parliamentary Conservative party that its interests are best served by doing so. For these reasons, we think a government led by the Conservatives can now be all but ruled out.
There are still two and a half weeks of the campaign to go before polling day, but postal votes are already being sent out to voter [...]
April 13, 2015 Reports
European mobile service revenue growth improved for a fourth consecutive quarter jumping 1.7ppts to -2.7%, the slowest rate of decline in over three years. Easing declines in France, Italy and Spain largely drove the improvement but a full recovery in these markets is still some way away given that all of their growth rates remain below -5%. The UK, and now Germany, are experiencing positive mobile service revenue growth although their improvements in the quarter were more modest. Three announced consolidation transactions have yet to be approved by the regulators although none of these deals are likely to offer much market repair, being either of the wrong kind of deal or being in markets that are growing. Consolidation targets remain in France, Italy and Spain which offer clearer routes to market recovery as seen in Germany where the consolidation of O2/E-Plus has already led to positive rhetoric on medium term market growth prospects. Network investment continues with 4G roll-outs at or over 70% population coverage in all markets and targets being accelerated, supporting long term optimism in the sector. Strong data traffic growth coupled with the growing importance of data to service revenue give a clear focus for operators on value-adding network quality investment, although the impact of pricing competition in some markets could weigh on the ability to capitalise on these trends in the medium term.
European mobile service revenue growth improved for a fourth consecutive quarter jumping 1.7ppts to -2.7%, the slowest rate of decl [...]
March 26, 2015 ReportsBT announced this week its fourth launch of consumer mobile, following three failures since it split from O2 in 2001. The product is SIM-only, low-end priced and lacks any ‘convergent’ features as yet, but is well structured to target those likely to take a BT mobile service in our view. While its ambitions may be modest, take-up may well be higher than its over-ambitious over-complicated predecessors, as well as giving BT experience in cross-selling mobile prior to its EE acquisition.BT announced this week its fourth launch of consumer mobile, following three failures since it split from O2 in 2001. The product is SIM-only, low-end priced a [...]
March 16, 2015 Reports
Apple has provided more details on its smartwatch range, on sale from April, priced between $350-$17,000 to appeal to a wide range of would-be buyers and initially focusing on enhancing the iPhone through added convenience. The Watch is likely to develop quickly in the next few years, and has the potential to become an indispensable tool for managing payments, health data and identity, as well as controlling other connected devices. The company is laying the foundations for Watch to become a must-have device, but the case is still to be made and ultimately its success depends on a number of key groups and factors outside Apple’s control.
Apple has provided more details on its smartwatch range, on sale from April, priced between $350-$17,000 to appeal to a wide range [...]
March 12, 2015 Reports
Scotland could produce up to 57 SNP MPs (of a total of 59 seats in Scotland), up from 6 in 2010: from “How many seats to the SNP?”, the question now is “Which Scottish seats won’t the SNP win?”. Labour’s losses in Scotland could be more than offset by Con-to-Lab and Lib-to-Lab swings in England, leading to our estimate that Labour and the Conservatives will each garner ~270 seats, well short of the practical majority of 322 seats, producing a hung Parliament as the initial outcome of GE2015. A possible scenario for the emergence of a working government is a Labour minority government sustained by the SNP votes through a ‘confidence and supply’ agreement for major votes and issue-by-issue on other votes, a weak form of government.
Scotland could produce up to 57 SNP MPs (of a total of 59 seats in Scotland), up from 6 in 2010: from “How many seats to the SNP? [...]
March 10, 2015 ReportsYouTube remains the dominant online video site globally, although competition for the viewer is growing from OTT video and other popular apps. Reach and consumption appear to be slowing in the US and the UK, but YouTube reports strong growth in global watch time as smartphone adoption proceeds. The number and variety of Multi-Channel Networks (MCNs) on YouTube continues to grow. Music video MCN Vevo has so far been the largest single presence on YouTube, but it is being overtaken by the combined Disney/Maker Studios MCN. In contrast to the aggregator MCNs with tens of thousands of channels, studio MCNs have much smaller network sizes and a higher share of owned channels. Their focus on content curation and creation has allowed some to build global audiences of repeat viewers, a unique strength and of significant appeal for advertisers.YouTube remains the dominant online video site globally, although competition for the viewer is growing from OTT video and other popular apps. Reach and consump [...]
February 27, 2015 Reports
The UK residential communications sector continues to be in rude health, with revenue growth in Q4 accelerating by 1ppt to 5.7%, the strongest it has been for years, with all of the operators enjoying an improvement. Volumes were strong, and ARPU even stronger, with the latter driving most of the revenue growth progress, driven by firm pricing and high speed broadband adoption. Growing revenues and profits in an industry tends to encourage both investment and competition, and this is certainly the case in the fixed telecoms market, as BT announced plans for higher speed services using G.fast and Virgin Media announced a 4 million premises network expansion. The timings suggest that Virgin Media will keep its edge; given historic trends and its network capabilities we expect it to be offering superior speeds to G.fast by the time G.fast hits the mass market. In competitive terms the biggest short term threat is EE, which is growing its broadband base at 15%, and may accelerate further in 2015. Its success appear to stem not so much from the raw appeal of ‘quad play’ bundling as improved performance in the mechanics of cross-selling from physical shops. EE itself may be less of a threat if its planned merger with BT is completed, but Vodafone is launching broadband services in the spring, and H3G/O2 may yet be encouraged into the market.
The UK residential communications sector continues to be in rude health, with revenue growth in Q4 accelerating by 1ppt to 5.7%, th [...]
February 20, 2015 Reports
Virgin Media’s Q4 results were strong across all measures, with household, RGU and all product net adds accelerating, revenue accelerating, and OCF growth. As demand for high speed broadband grows, Virgin Media is benefiting by offering the fastest top speeds and by being the cheapest provider for speeds over 30Mbps. The company has announced a £3bn investment to extend its network by 4m premises, which may win it an extra 6% share of the broadband market at the expense of BT, Sky and TalkTalk.
Virgin Media’s Q4 results were strong across all measures, with household, RGU and all product net adds accelerating, revenue acc [...]
February 9, 2015 Reports
The iPhone 6 and 6 Plus drove Apple’s most extraordinary quarter ever, with the company’s position in the smartphone market improving on all fronts: explosive growth in China, rising market share in the US and a rising average sales price. By contrast, iPad sales continued to decline in spite of the iPad Air 2’s release, suffering from cannibalisation by the phablet-sized 6 Plus and saturation in developed markets. Apple has a strategy to revive sales, which may bear fruit later in the year. A slate of new products is coming this year, led in the spring by Apple Watch. The question is, will Watch be a significant new source of profit or just a way to protect the iPhone’s dominant position in the smartphone market.
The iPhone 6 and 6 Plus drove Apple’s most extraordinary quarter ever, with the company’s position in the smartphone market imp [...]
February 9, 2015 Reports
Sky plc, the coming together of BSkyB, Sky Deutschland and Sky Italia, has enjoyed an excellent start, as adjusted H1 2015 figures delivered a 5% increase in revenues versus a 3% increase in costs, resulting in EBITDA growth of 7% and with free cash flow up by 25%. The strong financial results were accompanied by strong subscriber growth figures, especially in the operations covering Austria, Germany, Ireland and the UK, while all markets showed large reductions in churn, reinforcing confidence in the strategic approach of Sky plc. It is too early to assess Sky’s delivery of its target group synergies. Individually, the former BSkyB and Sky Deutschland markets may be showing much stronger subscriber and product growth, but they also look to be more exposed to risk over football rights, while Sky Italia has more going for it than may appear at first sight.
Sky plc, the coming together of BSkyB, Sky Deutschland and Sky Italia, has enjoyed an excellent start, as adjusted H1 2015 figures [...]