Format: Jan 2017
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Sector(s) Datesort ascending
Virgin Media Q4 2008 results: one step forward, one step back

VMed’s Q4 results were mixed, with consumer cable revenue remaining stable but cable net adds dropping significantly and opex performance hit by rising energy costs

Group OCF was stable thanks to improvements at Virgin Mobile and Content

We expect performance to prove relatively resilient in 2009, though not to the extent of generating significant growth in underlying annual cash flow

  • Virgin Media
TV, Media, Telecoms, Fixed Line 2 March 2009
Canvas offers future path for 'Free TV'

Project Canvas is the BBC/ITV/BT backed proposal for next generation Freeview and Freesat services that embraces IPTV reception, new EPG, home storage and HDTV applications

Setting up Canvas as a not-for-profit consortium and making it non-exclusive to content providers should avoid the competition issues which killed Kangaroo, but many questions remain and technical and regulatory delays could push back the launch to 2011

We do not expect Canvas to make a major difference to non-linear viewing of audiovisual content – its importance lies much more in future-proofing the ‘Free TV’ viewing experience on the terrestrial and satellite platforms

  • BT
  • BBC
  • ITV
Media, TV, Internet 27 February 2009
On-demand music streaming from Spotify

Project Canvas is the BBC/ITV/BT backed proposal for next generation Freeview and Freesat services that embraces IPTV reception, new EPG, home storage and HDTV applications

Setting up Canvas as a not-for-profit consortium and making it non-exclusive to content providers should avoid the competition issues which killed Kangaroo, but many questions remain and technical and regulatory delays could push back the launch to 2011

We do not expect Canvas to make a major difference to non-linear viewing of audiovisual content – its importance lies much more in future-proofing the ‘Free TV’ viewing experience on the terrestrial and satellite platforms

Media, Music and Radio 26 February 2009
Local media and the OFT review of the merger regime

The Office of Fair Trading (OFT) has confirmed it is to follow up on Lord Carter's interim Digital Britain report by launching a full consultation on the local and regional media ownership regime, with a call for "views from interested stakeholders" on the key issues for the review of the merger regime to be submitted by 28th February

Although the OFT’s announcement notes the “pressures” on local and regional media, the evidence points to a local media sector in steep decline, a trend which the UK’s recession will only exacerbate

Local media will need to consolidate further in the near future if jobs and the supply of local media to communities are to be preserved in a period of declining revenues, and the merger regime (which applies to all UK specific mergers) is a barrier to this consolidation and places a disproportionate burden on local media

Media, Press 23 February 2009
More red than black and white

Recent ABC declines in consumer magazines are not indicative of the accelerated declines experienced in the past 12 weeks

All print media is engulfed in a ‘perfect storm’ of falling consumption, collapsing advertising, and some rising costs

Print advertising will fall by as much as 30% for some print sectors in 2009, pushing previously profitable businesses to the edge

Media, Press 20 February 2009
BT FY 2008-09 Q3 results: another mighty wave is looming

As announced in the January trading update, BT’s Q3 results were hit by poor cost control at Global Services and the identification of some ‘toxic’ contracts. Performance elsewhere continued to be reasonable but helped by a spike at Openreach and non-core business

With a further ‘one-off’ charge against GS EBITDA in Q4 a virtual certainty, we continue to expect problems at Global Services to combine with recessionary pressures and stalling broadband growth to constrain performance well into 2010

A large pension deficit at the actuarial valuation in May looks inevitable. The Digital Britain initiative could pave the way for legitimate government and regulatory support

  • BT
Telecoms, Fixed Line 17 February 2009
UK spectrum withdrawal 2: Ofcom still wants it back

Ofcom has come up with a new 900MHz spectrum refarming/redistribution proposal, in which only 5MHz of spectrum is taken from Vodafone and O2, as opposed to the 15MHz it previously proposed

We still think that disrupting the voice and text services of existing customers in order to extend the availability of little-used 3G data services makes little sense, and that rearranging a small amount of intensively used spectrum when a far larger amount of unused spectrum is about to become available makes even less sense

Should Vodafone and O2 continue to oppose having their spectrum taken away, as appears likely, the delays to new spectrum auctions are likely to continue

  • Vodafone
  • O2
Telecoms, Mobile 17 February 2009
BT Retail residential telephony price changes: rebalancing act

BT Retail is putting through another round of residential price changes, trading further aggressive cuts in call plans in return for 12 month contracts, increases in line rental and some volume-related call charges

The £1 line rental increase is in line with our expectations and could trigger a round of increases by other players following Ofcom’s forthcoming statement on Openreach’s wholesale price ceilings

The price changes should help BT Retail to both defend its residential customer base and conserve ARPU. However, some further loss of residential market share looks inevitable

  • BT
Telecoms, Fixed Line 11 February 2009
European mobile market consolidation

The planned merger of Vodafone and H3G in Australia has raised the question of what consolidation could occur in Europe, although a direct analogy is not appropriate because Vodafone is much weaker in Australia (#3 operator) than it is in the larger European countries, and so would face much more regulatory scrutiny in Europe

The only merger opportunities in the top five markets which would have a similar or lower theoretical impact on competition (and hence would theoretically be as easily approved) in the top five European countries would be T-Mobile and H3G in the UK, Wind and H3G in Italy, and any operator with Yoigo in Spain

There are massive cost savings to be had from in-market consolidation, with network, marketing and general administration costs all fully overlapping between operators. The non-merging players would also enjoy a period of less competitive intensity, which may last indefinitely

  • Vodafone
  • T-Mobile
  • Hutchison 3G
Telecoms, Mobile, Non-UK Telecoms 11 February 2009
Touchscreen Smartphones: the rise of the iClones?

The iPhone has inspired all the major Smartphone makers to launch touchscreen models, and dramatically improve the usability of their interfaces. The iPhone itself remains the most easily usable touchscreen handset in our view, although at the cost of speed of use and adaptability

Unfortunately, the characteristics that make these handsets easier to surf the internet with – large screens and/or QWERTY keyboards – are just the characteristics that are unlikely to trickle down into mass market handset models, meaning that the impact on mobile data usage is limited

We continue to believe that web browsing is unlikely to be popular on mass market handsets for the foreseeable future, but usage of web services can be popularised by more of a widget approach, which the cheap but smart INQ1 handset demonstrates well

  • Apple
Mobile, Telecoms 10 February 2009
Sky Five Setanta One

The Premier League has succeeded in obtaining a 4.4% increase in live televised rights payments from £1,706 million to £1,782 million for the next three year contract commencing with the 2010/11 football season

The big surprise was that Sky bid more than last time round (by an estimated factor of circa 7.5% for its current four packages), while Setanta bid roughly 20% less for its two packages, thereby losing one to Sky

The highly contrasting bidding approaches appear to reflect completely different mindsets, with the not yet viable Setanta focused on the economic value of the PL rights, and Sky taken up with demonstrating long-term commitment to the PL

  • Sky
Media, TV 10 February 2009
Channel 4 future funding challenge

The essential conclusion of Ofcom’s Second Public Service Broadcasting Review is that the present commercial PSB model is unsustainable in the digital age. The Ofcom solution of fixing on Channel 4 as the “alternative, commercial PSB voice”, while freeing up the Channel 3 and 5 licensees from most of their PSB obligations, still leaves a major funding gap

A particularly attractive solution is some kind of synergy-generating merger/JV/partnership, but difficult to achieve in practice. The attached note examines the main issues that we may expect to arise with the existing proposals

  • Channel 4
  • BBC
  • ITV
Media, TV 6 February 2009
Web TV: Kangaroo is dead, long live Marquee

Kangaroo – the proposed BBC Worldwide/ITV/Channel 4 video-on-demand (VOD) service – has been terminated by the Competition Commission (CC) due to fears that it could control the wholesale and retail supply of UK TV VOD

In our view the CC decision is a lucky escape for all three shareholders since it will save them from investing potentially tens of millions in an ill-advised venture which could have become a bottomless money pit when they can least afford it

Near term ITV and Channel 4 will refocus their internet strategies around their own portals and online syndication deals, but these are unlikely to deliver significant revenue; Marquee – the BBC’s proposition to open up iPlayer to other PSB broadcasters – could help, with the advantage of being very low cost

  • BBC
  • Channel 4
  • ITV
Media, TV, Internet 5 February 2009
Vodafone Q3 Interim Management Statement: slowing less quickly

Vodafone’s December quarter KPIs showed only slightly worse underlying European revenue growth compared to last quarter, with another plummet in growth in Spain moderated by improving figures in Germany

In the context of GDP growth across its markets being considerably worse, this is a relatively good performance, with its market share loss likely to prove less severe than last quarter

However, its growth is still very substantially worse than earlier in the year, even compared to GDP, and with GDP declines set to worsen through 2009, and termination rate cuts to bite again in the second half of 2009, growth is likely to decline further

  • Vodafone
Telecoms, Mobile, Non-UK Telecoms 4 February 2009
NGA in Sweden

This presentation on Next Generation Access in Sweden is the fourth of our reports on NGA in the Continent, after France, The Netherlands and Germany

Announced in March 2008, incumbent TeliaSonera plans to supply between 1.5 and 2 million FTTH or FTTB+VDSL connections to offer very high speed broadband access and HDTV in multiroom via its ISP brand. In our view, Telia’s strategic rationale on NGA, in the context of declining fixed line revenues, is mainly to develop the IPTV proposition to better counter the competitive challenge of cable operator ComHem, the country’s leading TV provider, on broadband and telephony

Telia also hopes to undermine the proliferation of small scale local open access FTTx networks, which allow competitor ISPs to bypass Telia’s wholesale last-mile access products. Such local networks, together with FTTx operator Bredbandsbolaget (B2), have given Sweden the largest number of FTTx connections in Europe, about one in five residential connections

Telecoms, Fixed Line, Non-UK Telecoms 4 February 2009
UK telecoms and the Digital Britain Interim Report: the art of the possible

On next generation access, the interim Digital Britain report has little new to say, but leaves the door open to using public money to help implement it. We think the chance of this happening as part of a ‘deal’ with fixed network operators has increased

On mobile spectrum, the report instructs the mobile operators to agree between themselves a solution to the most contentious issue, 2G spectrum redistribution, or face a solution being imposed. We doubt they will agree, leaving the government to decide and enforce a way forward

On universal broadband, the government is aiming for a 2 Mbit/s commitment. It is early days, but we expect a hybrid wireline/wireless solution, paid for by a combination of government funding, and/or a levy on industry players based on share of industry revenue, which we expect will be fiercely resisted

Telecoms, Mobile, Fixed Line 2 February 2009
Pay-TV Sky still blue: fiscal Q2 2009 results

Strong Q2 results announced on Wednesday 28th January 2009 provided no evidence of negative impact so far due to the current recession

Sky+ HD looks set to provide a major growth opportunity, especially with the Sky+ HD box prices now dropping to £49. That and another record quarter for Sky+ take-up strengthens the view that Sky will meet its target of 10 million pay-TV subscribers by the end of 2010 with room to spare

Fixed line results again displayed relatively strong subscriber growth in an increasingly difficult market, but the operating loss excluding Easynet continued to deepen. Original standalone IRR guidance for fixed line looks unlikely to be met without further price increases

  • Sky
TV, Media, Telecoms, Fixed Line 30 January 2009
UK mobile termination rates: down but not out

The CC determination on mobile termination rates (MTRs), if implemented, would result in a cumulative 4% reduction in UK mobile industry revenue and EBITDA by the 2010/11 financial year, but a small boost to fixed line industry EBITDA

However, even this cut does not make up for the termination rate cut ‘holiday’ that the UK mobile industry has been enjoying for the last 2-3 years, with MTRs still high in relation to retail tariffs by historic standards

On the positive side (for the MNOs), this means that increased competitive pricing pressure is unlikely in the short term; on the negative side we still expect substantial further cuts from April 2011. These cuts are broadly lagging those in the rest of Europe, so there is no negative read-across for most European MNOs

Telecoms, Mobile 29 January 2009
DMGT offloads Evening Standard for £15 million

DMGT has sold a 75% stake in its London title, the Evening Standard, to Russian investor Alexander Lebedev for £15 million

The deal helps DMGT reduce its losses at the title, thought to be up to £20 million a year

While the sale also underlines the publisher’s commitment to reducing its reliance on volatile newspaper assets, we think it highly unlikely that the crown jewels – the Daily Mail and the Mail on Sunday – will come to market, although the story could be different for regional division Northcliffe

  • DMGT
Media, Press 27 January 2009
BT unscheduled trading update: further drastic revisions at Global Services, with more to come

BT’s latest trading update involved a massive £340 million one-off charge to reflect a more cautious view of contract profitability and realign reported performance with cash flow; in addition reported GS EBITDA for the quarter to December is expected to be negligible

There will be little visibility of improved performance at GS until the various ongoing reviews of the business are completed, with a further charge related to one or more NHS contracts the most likely outcome

Performance at the rest of BT group is continuing to be relatively resilient, and price changes at BT Retail and Openreach should help to an extent. But GS looks likely to prove a major drag on group performance well into 2010

  • BT
Telecoms, Fixed Line 23 January 2009