Mobile coverage: The search for ubiquity

Service revenue worsened by 1ppt this quarter to -1.7%, but this is heavily distorted by one-off factors, in particular the blowback from O2’s controversial price increases.

For the same reason, MVNOs enjoyed their best quarter ever, particularly Sky and Tesco Mobile.

The launch of ‘O2 Satellite’ will bring a welcome brand halo-effect. Limitations of satellite direct-to-device both make the consumer proposition a tricky one, and protect the mobile industry from cannibalisation. 

Vodafone has announced that it is looking to launch a satellite direct-to-device service with AST Space Mobile in Europe "later in 2025 and 2026", while also demonstrating the first satellite video call in the UK.

The key challenge for AST Space Mobile is scaling up its constellation, with significant uncertainty remaining around their ability to both manufacture satellites on time and the rockets available to deliver them.

Potential for a full mobile broadband service is a key differentiator versus Starlink's text-only service, and if AST can deliver then Vodafone could be first to market in the UK with a direct-to-device service.

Ofcom’s final statement on net neutrality addresses most of our prior concerns, leading to opportunities for UK telcos to effectively address internet congestion, and monetise their network capabilities.

BT is looking to take advantage of its new freedoms with new TV distribution services, which could save network capacity, improve user experience and earn it a share of the content distribution value chain.

We think that there are many other attractive opportunities, but telcos will have to work hard to sell any of them given the need to work together and reverse the bad blood that has developed with many content providers.