BT: Searching for the nadir
BT had a weak December quarter, with revenue falling 3% and EBITDA 4%, despite a recovery at Openreach, mainly driven by tough competition and regulatory hits, with operating metrics solid but not noticeably improving.
These hits look set to continue, so the company’s hopes of a return to EBITDA growth in 2020/21 probably hinge on brand and service improvements actually becoming visible in operating performance.
A successful full fibre roll-out would be a boon for BT in the longer term, and regulatory developments are headed in the right direction, if not quite there yet. However, its affordability without a dividend cut remains questionable in the current challenging environment.
Related reports
Reality bites, and will bite some more: UK mobile market Q2 2019
4 September 2019The UK mobile market suffered its worst performance in five years this quarter with Vodafone alone, somewhat inexplicably, bucking the trend
5G capacity is impacting pricing trends with SIM only packages flattening and unlimited packages increasing in popularity and complexity
As the operators invest in solving rural coverage and rolling out 5G, they will continue to be hit by regulation. Out of contract notifications and discounts are next in a long series of assaults
UK broadband, telephony and pay TV trends Q2 2019: Pressure still on
16 September 2019Market revenue growth bounced back to all of 1% in Q2 after near zero in the previous quarter, with broadband volumes at a near standstill
Operators appear resigned to this however, with new customer pricing appearing to recover, and wholesale price cuts not to be repeated
On the downside, further regulatory and commercial pressure on existing customer pricing is likely, and pricing détentes are often short lived
Virgin Media: subscribers fall but ARPU grows
15 August 2019Virgin Media’s results were quite mixed, with the subscriber base shrinking in a very slow market, but ARPU and revenue returning to growth despite pricing pressure and regulatory drags
The outlook remains challenging, but market pricing does seem to be easing with no repeat of the damaging Openreach price cuts on the horizon
‘Full fibre’ roll-outs will bring further challenges, but opportunities as well, with the accompanying focus on higher speeds likely to be a significant operational upside in the short to medium term
BT: Temporary problems, long term promise
12 August 2019BT’s divisions had contrasting fortunes in Q1 2019/20, with Consumer revenue growth sharply turning negative but Openreach external revenue growth accelerating to 10%, leaving the Group level unchanged at -1% and EBITDA on course to meet guidance.
Consumer was hit by several regulatory and pricing factors mainly affecting mobile, and the short-term outlook remains tough, with a number of legacy pricing issues across fixed and mobile still to be resolved.
Openreach is reaping the benefit of previous price declines annualizing out, allowing it to take full advantage of higher speed demand, and due to its full fibre roll-out this dynamic could persevere for years.
Slower but steadier: TalkTalk Q1 2019-20 results
23 July 2019TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017
The subscriber drop was, however, modest and looks quite deliberate, with there being evidence of price firming in both direct and indirect channels supporting both ARPU and margin
This more cautious approach, if it can be sustained, puts the company on a much more healthy footing in our view, allowing it to achieve its financial targets without increasingly unsustainable existing customer price rises
Market revenue growth dipped to around zero in Q1, with fierce competition on new customer pricing the major factor
All four of the big operators now suffer from declining ARPU, with existing customer price rises increasingly hard to land given falling prices for new customers
The rapid move to superfast is not helping as much as it should; the operators will hope that they fare better with the move to ultrafast
Reality bites, and will bite some more: UK mobile market Q2 2019
4 September 2019The UK mobile market suffered its worst performance in five years this quarter with Vodafone alone, somewhat inexplicably, bucking the trend
5G capacity is impacting pricing trends with SIM only packages flattening and unlimited packages increasing in popularity and complexity
As the operators invest in solving rural coverage and rolling out 5G, they will continue to be hit by regulation. Out of contract notifications and discounts are next in a long series of assaults
UK broadband, telephony and pay TV trends Q2 2019: Pressure still on
16 September 2019Market revenue growth bounced back to all of 1% in Q2 after near zero in the previous quarter, with broadband volumes at a near standstill
Operators appear resigned to this however, with new customer pricing appearing to recover, and wholesale price cuts not to be repeated
On the downside, further regulatory and commercial pressure on existing customer pricing is likely, and pricing détentes are often short lived
Virgin Media: subscribers fall but ARPU grows
15 August 2019Virgin Media’s results were quite mixed, with the subscriber base shrinking in a very slow market, but ARPU and revenue returning to growth despite pricing pressure and regulatory drags
The outlook remains challenging, but market pricing does seem to be easing with no repeat of the damaging Openreach price cuts on the horizon
‘Full fibre’ roll-outs will bring further challenges, but opportunities as well, with the accompanying focus on higher speeds likely to be a significant operational upside in the short to medium term
BT: Temporary problems, long term promise
12 August 2019BT’s divisions had contrasting fortunes in Q1 2019/20, with Consumer revenue growth sharply turning negative but Openreach external revenue growth accelerating to 10%, leaving the Group level unchanged at -1% and EBITDA on course to meet guidance.
Consumer was hit by several regulatory and pricing factors mainly affecting mobile, and the short-term outlook remains tough, with a number of legacy pricing issues across fixed and mobile still to be resolved.
Openreach is reaping the benefit of previous price declines annualizing out, allowing it to take full advantage of higher speed demand, and due to its full fibre roll-out this dynamic could persevere for years.
Slower but steadier: TalkTalk Q1 2019-20 results
23 July 2019TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017
The subscriber drop was, however, modest and looks quite deliberate, with there being evidence of price firming in both direct and indirect channels supporting both ARPU and margin
This more cautious approach, if it can be sustained, puts the company on a much more healthy footing in our view, allowing it to achieve its financial targets without increasingly unsustainable existing customer price rises
Market revenue growth dipped to around zero in Q1, with fierce competition on new customer pricing the major factor
All four of the big operators now suffer from declining ARPU, with existing customer price rises increasingly hard to land given falling prices for new customers
The rapid move to superfast is not helping as much as it should; the operators will hope that they fare better with the move to ultrafast