UK 4G spectrum consultation: preserving the big 4
Ofcom is proposing to design the 800MHz and 2.6GHz spectrum auctions to ensure that the UK mobile market remains at four players, through a complex set of rules largely designed to help H3G get the spectrum it needs to remain competitive
However, the sting in the tale is that Ofcom expects H3G to pay around £600m for this spectrum, which it may not want to do, and it is not clear what the backup plan would then be |
Mobile, Telecoms |
March 2011 Access this report
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The New York Times and pay models
The New York Times is shortly to switch its free desktop and app services into a part-free and part-paid metered system. We also expect the UK Times to switch from its subscription ‘Berlin wall’ to a similar system
In the UK, quality newspaper circulation is moving into freefall, as smartphone and tablet devices provide target consumers with 24/7 news coverage on the sofa and on the move |
Media, Press, Internet |
March 2011 Access this report
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Next Generation Access in Europe
European regulators are struggling to find the right balance between promoting the competitive impact of local loop unbundling (LLU) and encouraging investment in next generation access networks by incumbents and others
In continental Europe, regulators have tended to focus on the provision by incumbents to competing providers of access to physical infrastructure. This affords competing providers a high degree of product differentiation, but tends to be relatively uneconomic, to the detriment of unbundlers in markets where the cable operator is strong |
Fixed line, Telecoms |
March 2011 Access this report
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H3G 2010 results: improving to breakeven
H3G Europe improved its revenue growth and margins in 2010, albeit not by as much as its headline figures claimed. It is currently growing at 5% with EBIT at around breakeven
Given that its parent company is likely to want to keep EBIT positive, it is likely to be constrained on future investment in subscriber growth, limiting its potential going forward |
Mobile, Telecoms |
April 2011 Access this report
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Regional press left behind in media bounceback
Growth in advertising for TV and the largest popular newspapers has not spread to local media, with regional press suffering declines in recruitment, auto and retail in 2010 despite colossal falls the previous year
Operating profit recovery in 2010 demonstrates firm management cost control, although the largest businesses have suffered 20% decline in annual profits since 2006 |
Media, Press, Internet |
April 2011 Access this report
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Ofcom’s wholesale charge proposals: slightly negative for BT, slightly positive for others
Some of Ofcom’s proposed wholesale charge controls for Openreach fixed access services sound stringent
However, we estimate that the overall financial impact on BT and other players is likely to be very small
We do not expect the proposals to result in changes to many retail prices, but they should tilt the playing field slightly in favour of BT Retail’s competitors, particularly smaller providers of broadband and business services |
Fixed line, Telecoms |
April 2011 Access this report
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UK internet advertising: Facebook to the fore
UK internet ad spend rose 13% YoY in 2010 to £4.1 billion; stripping out newly included formats such as mobile and Google hedging gains indicates actual growth was 15%
Growth in display, increasingly powered by Facebook and Google, continued to outpace that of search, with early signs that some brand advertising is shifting online
We have revised our growth forecast for 2011 to 10%, taking spend including mobile to £4,400 million, pushing the internet’s share of total advertising to 27% |
Media, Internet |
April 2011 Access this report
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Fujitsu’s rural FTTP announcement
Fujitsu UK’s announcement of plans to provide wholesale fibre-to-the-premise (FTTP) to five million premises potentially poses a significant threat to BT
However, deployment is contingent on the project attracting at least 60% of the available state funding and significant improvement by Openreach of its terms for Physical Infrastructure Access (PIA) |
Fixed line, Telecoms |
April 2011 Access this report
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The ebooks explosion
Market data and industry anecdote point to an explosion in ebook sales in the US and UK in 2011. Leading consumer publishers are seeing ebook sales at 10-15% of total sales in January and February, driven by Christmas device sales
So far ebooks had been strongest in niches: romance, business books and frequent travellers. They have now moved into the mass market: few genres will be untouched |
Media, Mobile, Technology, Telecoms |
April 2011 Access this report
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Google UK Q1 results: cyclical slowdown
In Q1, Google’s UK gross revenue increased 13% YoY to £602 million (net of hedging gains), down from the 18% growth in the last quarter and in Q1 2010
Slowing growth appears to be due to the weak state of the UK economy, with consumers and advertisers alike holding back on online spending compared to previous years
We have downgraded our 2011 UK growth forecasts for Google and internet advertising spend to 12% and 9% YOY respectively; while search remains the main market driver, online display is increasingly the key battleground |
Media, Internet |
April 2011 Access this report
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Virgin Media Q1 2011 results: still respectable, but growth dropping
VMed’s Q1 results were respectable, helped by strong revenue growth at Virgin Media Business
However, growth in volume, ARPU and OCF, while still positive, is trending downwards, and we retain our expectation of more limited progress in 2011 compared to 2010
VMed’s strategy is coherent; the issue is the pace at which initiatives such as high speed broadband, service convergence and footprint expansion can be converted into cash flow growth |
Media, Mobile, TV, Fixed line, Telecoms |
April 2011 Access this report
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Strong underlying growth trajectory: Sky fiscal Q3 2011 results
Sky is managing to sustain strong underlying growth in the face of a challenging retail environment, in which it has maintained strong growth rates in quarterly gross TV additions and home communications products
Revenues were slightly down on the previous quarter, but this was mainly due to the January increase in VAT and seasonal variations in advertising spend, while the results confirmed the company’s strong discretionary control over costs |
Media, TV, Fixed line, Telecoms |
April 2011 Access this report
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Carphone Warehouse Q4 2010/11 results: weathering storms
CPW Europe had a difficult quarter, with volumes falling 9% and like-for-like revenue 2%, due to continued prepay weakness and the shift to 24 month contracts in the UK
The US business was again very strong, growing volumes at 26%, and this strength is likely to continue due to an acceleration in store roll outs
Keeping the European business flat in 2011/12 will be a challenge, but the US business is likely to more than make up for this at the group level |
Mobile, Technology, Telecoms |
May 2011 Access this report
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Facebook’s threat to Google
Facebook's audience and consumption growth is now generating substantial and rising display advertising revenue, with consensus estimates of $2 billion in 2010, up 160% YoY, and it will overtake Google on this count this year
The social network's growing position as the centre of the internet experience is enabling it to become a platform for other services, such as e-commerce, making it an increasing strategic threat to Google, as well as other players in the digital media |
Media, Internet |
May 2011 Access this report
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Apple: everything going right?
In the March 2011 quarter Apple’s revenue was up 83% year-on-year and net income up 95%. iPhone sales are up 113% and the iPad has sold 19.5m units in the last 12 months. Even the ‘legacy’ Mac business grew 32%, and Apple now has over $65bn cash in the bank. Not bad for a niche business
With single digit penetration in its core growth businesses, Apple has the opportunity to continue growing fast for some time to come |
Media, Mobile, Telecoms |
May 2011 Access this report
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BT Q4 2010/11 results: guidance met but fundamental outlook unexciting
BT met its full year guidance for the second year running, but new guidance reflects the weak revenue outlook and limited potential for further cost reduction
Group performance continues to hinge on capex levels, in particular deployment of next generation access, scheduled to continue until 2015
BT is not a financial basket case doomed to be eaten alive by mobile, satellite, cable or internet-based alternatives. But nor does it look like a huge growth story |
Fixed line, Telecoms |
May 2011 Access this report
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Vodafone FY 2010/11 results: performing well in a weak market, smartphones helping
Vodafone Europe’s service revenue growth dipped by 1ppt in the March 2011 quarter, but nearly all of this was due to regulated MTR cuts, with its competitive performance actually improving again
The combined Europe and common cost EBITDA margin was actually held flat in H2 10/11 on H2 09/10, aided by some heroic (and, frankly, uncharacteristic) cost cutting efforts, with Vodafone’s cost profligacy days apparently behind it |
Mobile, Telecoms |
May 2011 Access this report
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Sky Deutschland on the mend
Sky’s revamped model has delivered a sharp reduction in churn and higher gross additions, accelerating subscriber growth. Rising high definition take-up is sustaining the increase in average revenue per user
Business prospects are improving on stronger private consumption and a carriage deal for HD versions of German commercial channels
Our forecasts have been revised upwards and we now expect faster improvement in cash flow, though it will still be negative in 2013 |
Media, TV |
May 2011 Access this report
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TalkTalk Group FY 2010/11 results: solid financial performance despite high churn
TTG’s full year results were, in the most important respects, solid, despite customer service issues and high churn caused by the migration of former Tiscali customers onto a single set of platforms
We remain cautious about the speed with which churn can be reduced, but there is little sign of the problem spreading beyond the former Tiscali base
Operating leverage and cost reduction have been impressive and give us confidence that new financial guidance will be met, although other sources of growth remain elusive |
Media, Fixed line, Internet, Telecoms |
May 2011 Access this report
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Ebooks and accelerated change in bookselling
Amazon now sells more ebooks than print books on Amazon.com, while overall US ebook sales were 15.6% of the consumer market in March, up 142% from last year. Meanwhile, for some publishers over half of book sales are now through companies that are not book sellers
Waterstone’s has been bought by a Russian investor for £53m, with James Daunt parachuted in to take it back to its roots in bookselling, while in the USA John Malone has bid for Barnes & Noble valuing it at $1.45bn |
Media, Mobile, Technology, Telecoms |
May 2011 Access this report
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