UK Broadband

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  • March 9, 2021

    Virgin Media: Subscribers strong, ARPU tough to turn

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    • Virgin Media’s subscriber growth continues to be very strong, and it looks like next quarter’s price rise will (at worst) only stall, not stop, the renaissance
    • ARPU was hit in Q4 by the postponed price rise, and it will likely remain in decline in 2021, with regulatory pricing pressure and lockdown effects still weighing, despite firm new customer pricing
    • Nonetheless, accelerating subscriber growth is expected to drive group revenue growth positive again (helped by B2B growth), and Virgin Media’s main strategic problem—its fibre trilemma—looks like it will be dealt with after the merger with O2, expected
  • March 3, 2021

    O2 :Trending nicely, outlook challenging

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    • All of O2’s operational metrics ticked up this quarter with service revenue growth, continued strong net adds and OIBDA growth particular highlights in spite of the end of O2’s Carphone Warehouse relationship
    • Next quarter will be hit by the prolonged lockdown and, in spite of an improving picture thereafter, there remain several challenges particularly lower in-contract price rises than peers and some pressure on MVNO revenues post Sky MVNO renegotiation
    • The merger with Virgin Media appears on track for a mid-year approval. O2 management will need to work hard to sustain their sharp operational focus at a time when merger integration and strategic question marks risk diverting much of their attention
  • January 19, 2021

    (UK) TalkTalk: Mixed results, future opaque

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    • TalkTalk’s latest results were mixed at best, with ARPU and revenue growth improving off a low last quarter, but net adds worsening, EBITDA falling sharply and full year EBITDA guidance suspended
    • Its outlook remains challenging, with the move to high speed still a drag on EBITDA, and the migration to ultrafast a further (even greater) challenge, although this brings opportunity as well, especially if the company can move away from its discount brand focus
    • Its prospective new owners highlight the need to invest in brand, systems, and full fibre capabilities to meet this challenge, but it is not clear where the money to do this is coming from, and it is also not clear if the desire to ‘reposition the brand’ includes a move upmarket
  • January 4, 2021

    Steady now, brighter outlook: European mobile in Q3 2020

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    • Mobile growth improved very marginally to -3.6% this quarter as roaming revenues were harder hit and competitive intensity bounced back, but usage recovered from the lockdowns in Q2 and cuts to intra-EU calls were annualised
    • Italy’s fortunes took a turn for the worse as roaming hit particularly hard and Iliad resurged. After a spate of downgrades to the outlook last quarter, there were some tentative upgrades in Q3 although the tone remains cautious
    • The diminished drag from roaming is the primary positive driver from here. Although lockdowns of some degree are in place in Q4, their impact will be less severe than those in Q2
  • December 16, 2020

    Brighter outlook: UK mobile market in Q3 2020

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    The UK mobile market outlook is better as the COVID impact eases overall thanks to reduced roaming impact, but the November lockdown (including store closures) will drag. Having become more cautious last quarter, many of the European operators, including BT and Vodafone, have edged their EBITDA outlook up very slightly.
    • Service revenue declines stabilised at -7% this quarter with a myriad of factors at play: roaming worsening, the end of lockdown taking some pressure off, B2B a mixed bag, and the annualisation of cuts to intra-EU calls
    • Ofcom’s second 5G auction will be a focus in January. We expect selective bidding, proceeds of up to £2.7bn, and some wrangling over spectrum trading
    • The outlook is better from here as the drag from roaming eases, in contract price rises step up from the spring, Carphone Warehouse diminishes as a factor in the market, and the prospect of consolidation is still on the table
  • November 13, 2020

    Virgin Media: Subscriber growth renaissance continues

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    Virgin Media’s lockdown subscriber surge continued into Q3, as working-from-home highlights the importance of the faster speeds its network can offer.
  • November 9, 2020

    BT: Glacially improving outlook

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    BT had a fairly mixed September quarter at the revenue level, with post-lockdown recovery evident in a number of areas, such as wholesale/commercial sports, Openreach installation and network build volumes, and consumer mobile net adds, but revenue weakness in mobile roaming (seasonal factors) and consumer fixed (regulator-inspired price cuts) resulted in overall group revenue growth unchanged.