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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 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 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 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 17, 2019Monthly Australian TMT Wrap: June 2019
Monthly wrap, ReportsJune was a relatively quiet month for Australian TMT space although few significant announcements.
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.
June 27, 20192019 UK TV advertising backstopped by Brexit
Flash Report, ReportsWe expect total TV ad revenues to decline 3.3% in H1 2019, partly due to a return to Earth following the idyllic conditions of the World Cup in June 2018. Bad omens for advertising for H2 include the sagging economy since April and the Government’s impetus to achieve Brexit on 31 October, with or without a deal. Our forecast remains a 3% decline for total TV ad revenues for 2019 as a whole, with the risk of a more serious downturn in 2020 in the wake of Brexit.
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 24, 2019Monthly Australian TMT Wrap: May 2019
Monthly wrap, ReportsMay was another busy month for the telco sector with significant announcements on three major M&A deals in the market. Furthermore, M&A activity continued to be strong in May with several deals announced.
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 aggressionJune 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
June 12, 2019Monetising user-generated video
Flash Report, ReportsVideo sharing platforms, like YouTube, Facebook Watch and Twitch, are vying to attract creators with monetisation options such as branded content and user payments. Advertising income, already limited for many small and medium-sized creators, has been undermined by YouTube’s response to brand safety concerns. The new tools come with their own obstacles, but are necessary to keep platforms attractive to video creators.
June 11, 2019Mobile Blackspot Programs: Telstra likely to be the future winner [...]
Flash Report, ReportsThe Commonwealth Government and States have funded four rounds of blackspots resulting in 1,047 new base stations. In March 2019, the Government announced two more blackspots rounds with total federal government funding of $160 million. Similar to the previous rounds, we expect the majority of total state and federal funding to go to Telstra. However, there are still bidding concerns for the rounds.
June 3, 2019TalkTalk UK: a welcome slowdown?
Flash Report, ReportsTalkTalk hit the bottom end of its (revised) 2018/19 EBITDA guidance, an achievement given fierce price competition and the margin-dilutive effect of high speed upgrades. This is however helped by one-off Openreach price cuts, and price rises for ancillary products (voice calls and pay-TV) and out-of-contract customers that look hard to sustain. Subscriber growth slowed dramatically in Q4, and continuing this more measured approach could help the company counter multiple market pressures, and perhaps even lead to a détente in the current price warsMay 29, 2019Vodafone – pressure is still on
Flash Report, ReportsVodafone’s operating performance worsened again this quarter with revenues down 3.3% and an extension of its underperformance relative to peers. Vodafone was right to cut its dividend given the extremity of the cash constraint. With financials in Euro terms in negative territory and worsening, an elevated and progressive dividend was not sustainable. In spite of difficult market conditions, the lower end of guidance looks achievable as comparables will become easier and football rights costs decline. The transformation programme will need to pay off fast to deliver any meaningful growth
