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Rigorous Fearless Independent

Vodafone’s performance this quarter was hit both by COVID and an underlying deterioration in its operational momentum—disappointing given regulatory easing and easier comparables.

Vodafone’s guidance has been more prudent than most going into this pandemic and these results support that cautious stance. Whether it’s a case of Vodafone underperforming or the sector being less resilient than expected will emerge over the coming weeks.

The IPO of Vodafone’s towers business is imperative to maintaining its leverage targets and dividend. It will need to sell a chunky slice of equity and realise a hefty multiple in challenging market conditions.  The profile of the asset for sale will help but it all remains very finely balanced.

Joseph said "Apple was the place people listened to podcasts, until just a couple of years ago. But they were asleep at the wheel, and didn't do anything to grow the market, give podcasters the tools they wanted ... or defend their position at the top of the pile. Probably podcasts were just too small to worry about for a company making a quarter of a trillion dollars a year. But that carelessness has allowed Spotify to challenge Apple for the top spot."

He added "Right now, most podcasts don't make any money from advertising, because they aren't big enough to sell ads directly to an agency. But Spotify could aggregate podcasts and sell to advertisers based on who's listening, rather than what they're listening to, and make podcast advertising work more like ads on the web."

Even with lockdown tailwinds, there are dampeners for the SVOD boom. The 27 May US launch of direct-to-consumer video service HBO Max did not save its parent company Home Box Office from a 5% year-on-year decrease in revenues in Q2 2020

Mid-term problems include confusing brand positioning for the service and uncertainty surrounding platform carriage—it remains unavailable via Roku or Amazon Fire TV products. Reported viewing trends seem positive but little original programming has cut through yet, while the production shutdown will affect nascent services more than those with established identities

This content push is costly and HBO's profitability may soon be gone. Quarterly operating income shrank 80% to $113 million thanks to a 33% jump in content costs due to the Max expansion

Sanchit said “If there is a second wave or third wave in the future, Cineworld needs to be sure that it can weather the storm. If studios still continue to hold back their films and the financial reality for Cineworld and some of the other cinema chains remains this bleak, then they are going to have to lay off a lot of staff and consider closing and liquidating some of their assets.”

TalkTalk started its new financial year with revenue growth declining to -8% in Q1, although this is partly lockdown-related, and costs have also declined as churn plummeted.

While backbook pricing continues to be a challenge, new customer pricing continues to firm, which makes its expectation of stable/growing EBITDA for FY2020/21 possible albeit still difficult.

The company expects to launch full fibre products from Openreach imminently, and from CityFibre before the end of the year, with the adoption and eventual economics of these crucial to its medium and long-term future.

The Betting and Gaming Council (BGC) which represents 90% of the UK’s betting and gaming industry (but not the National Lottery/other lotteries) announced its withdrawal of all TV and radio advertising for casino, slots and bingo during lockdown.

This follows its ‘whistle-to-whistle’ TV ban on sports advertising last year. However, as betting and gaming move increasingly online, so has industry marketing—but no budget has been pulled from social media or online.

While the initiatives create positive press, they provide further harm to broadcasters and hasten migration of budgets online, where there is a relative lack of stringent advertising regulation.