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Sogecable FY 2005 results recorded the first net profit (€7.7 million) since 2001, two and a half years after the merger with Vía Digital. With the after effects and restructuring costs of this merger behind it, the question we examine in this note is what growth can Sogecable's pay-TV business look forward to and what extra contribution will be made by the national free-to-air (FTA) analogue channel Cuatro, which launched on 7th November 2005?

Under rules agreed with the EC no one party could win all six packages. The surprise is that BSkyB has only won four, the other two going to Setanta. Although BSkyB has won the four ‘best-looking’ packages, it must pay an extra £97 million per annum for two thirds as many games 

Over the past 18 months, UK telecoms regulator Ofcom has seized on LLU as a catalyst for change, forcing BT to cut its LLU prices by up to 70%, separate its access services division from the rest of the business and commit legally to improve provisioning processes. Now the race is on to exploit LLU before growth in demand for broadband tails off, the merged NTL/Telewest emerges from restructuring and BT launches new services based on its ADSL2+ local loop upgrade and later, its £10 billion ‘Twenty-First Century’ network initiative. Two of the three surviving LLU pioneers have been sold to major players and AOL, Wanadoo, CarphoneWarehouse and BSkyB have all announced plans to implement LLU.

Global Services is now established as the main engine of growth at BT

The company will take a significant cash hit in the early years of the project but CPW’s new-found scale in fixed telephony means the strategy is likely to succeed 

C&W UK has warned of a sharp drop in organic EBITDA for C&W UK in 2006/07

The main underlying culprit was churn; as we predicted, this has risen as the subscriber base matures, choking off subscriber growth and increasing costs 

Broadband connections continued to increase strongly in the UK in Q4 2005 with 935,000 net additions, taking the UK total to just over 9.8 million connections and household broadband penetration to 35%. For 2005 as a whole, the UK broadband base rose by 60% - one of the fastest paces in Europe. Cable connections account for 27% of the broadband market with more than 99% of other connections provided via DSL.

Sound market fundamentals mean that the growth-based rationale for the bid should prove feasible 

Talk of a merger between the recorded music divisions of EMI and Warner Music Group to create the third largest recorded music group has been simmering for at least six months. After two failed attempts in the past six years, the logic of a merger continues to be strong and scale is an even more compelling objective given the continued difficult conditions in the recorded music market, despite rising digital sales in line with our forecasts. The question is when, not if and we believe that the time is fast approaching, judging by investment bank and private equity interest in the music publishing assets of each company.

We continue to expect group revenue growth to remain positive in spite of the impact of local loop unbundling

Mobile TV hype remains alive and well, but the DVB-H and DAB-IP standards are not progressing fast given a lack of European-wide spectrum

Vodafone’s discussions with Softbank to exit Japan could remove its most troubled and ill-fitting subsidiary, but only if the structure allows for a clean break, which will require tricky financial engineering given Softbank’s limited ability to pay

We estimate that savings for the typical French contract customer would actually be around 5%, and therefore not worth the extra handset cost and inconvenience involved 

BT Wholesale will launch IPStream Max, a rate adaptive ADSL product, on 31st March 2006, providing a downstream data rate greater than 6.5Mbit/s – a line speed that should support a wider range of good-quality video applications – to 25% of UK telephone lines

We believe that its focus on 3G is to blame, and the company seems poised to repeat this mistake with a focus on the latest industry fad, convergence