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BT is continuing to grow revenue in spite of increasing competition in the residential market

The experience of Versatel (now owned by Tele2) in The Netherlands provides a cautionary tale for new entrant altnets hoping to use premium content to gain broadband market share in a well-contested and maturing broadband market (58% household penetration). In late 2004,Versatel was the surprise winner of the 2000-2008 broadcast licence for the domestic football league Eredivisie (carried only by Versatel and licensed to satellite TV), but Versatel's broadband market share and that of other unbundlers fell in 2005 while those of incumbent KPN (operating under three brands) and cable rose.

We welcome that the company appears to be de-emphasising 3G, with SACs reduced and 3G as a percentage of handset sales dropping from 20% to 12%. Unfortunately, just as Vodafone is recovering from the 3G industry fad, it seems keen to get distracted by another – convergence 

Illiad’s new Freebox in France promises savings of ‘up to’ 40% for mobile users by using Wi-Fi to make mobile calls at home, creating fears that it will harm the French mobile industry 

BSkyB plans to unbundle 1,200 exchanges by the end of 2007, enabling it to offer shared or full LLU to 70% of UK homes. It will offer ‘free’ broadband up to 2Mb to all and only Sky DTH customers served by its unbundled exchanges. Or they can pay a little more, £5 and £10 a month respectively, for broadband up to 8 Mb or 16 Mb. In addition, all Sky Broadband customers will be able to take BSkyB’s telephony offer, Sky Talk for an additional £14 a month, which includes line rental and unlimited calls in the UK.

Orange’s new ‘free broadband’ offer brings savings of up to 60% for Orange UK customers who pay for broadband, and may appeal to a great many of them 

Vivendi Q1 2006 quarterly results show solid underlying improvement in earnings, but disappointing subscription figures, which fell by 40,000 in the quarter 

We regard meeting even this extended deadline as difficult given their slowing growth, churn problems and the increasing network costs associated with their network outsourcing deals, and furthermore EBITDA is unlikely to improve significantly from 2007 onwards 

Q1 2006 results show strong subscriber growth due to an enlarged LLU footprint and to promotions 

Vodafone's performance in its core European markets is continuing to worsen in both absolute terms and in relation to its competitors, and its margin progression is weak 

There is little evidence of a revenue meltdown

International subsidiaries continue to perform solidly 

Positive Q3 FY 2006 results and the announcement of a possible flotation have raised speculation that Sky Italia may be gearing itself up to follow BSkyB’s entry into broadband