Soft market, cautious tone: UK mobile market in Q1 2025
In a soft market for both consumer and B2B, service revenue trends continue to be dominated by in-contract price increase dynamics.
VodafoneThree’s launch signalled a cautious tone about prospects for mobile growth, presumably allowing for a degree of integration disruption.
VodafoneThree and VMO2 traded 79 MHz of usable spectrum, leaving VodafoneThree in a strong position spectrum-wise, albeit with some challenges given that its merger conditions reduce flexibility in its coverage approach.
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Subscribers in retreat: UK mobile market in Q4 2024
10 April 20252024 was the first year in history in which the network operators lost contract subscribers. MVNOs added 1.7m.
In-contract price increases are dominating revenue trends, with a somewhat flatlining outlook on an underlying basis but boosted by accounting technicalities.
We expect the Vodafone3 merger to close on 1 of May which has implications for buyout timing and will prompt higher capex, some early network upsides, and big strategic decisions for both Vodafone3 and BT/EE.
VodafoneThree launch: Astute, tentative steps
12 June 2025VodafoneThree's launch incorporates a number of swift and astute commercial decisions, which is particularly welcome given the challenging balancing act that the company needs to perform
The network upside will be felt quite quickly for Three customers primarily, with protection for Vodafone customers built in. Longer-term, the Government policy shift towards better coverage may require investment beyond the committed £11bn plan
We view some moves as helpful to prospects in the broadband market, others less so, and continue to have question marks about the attractiveness of this segment for VodafoneThree
Telecoms transformed: Vodafone3 merger impact
26 February 2025With the formation of Vodafone3, we envisage continued intense competition at the low end of the mobile market, a ramping up of pressure at the top end over time, and some opportunities in the short term.
New information on spectrum trading confirms the view that BT/EE will be most capacity constrained, but with various strategic options available to it.
Expected EBITDA growth of 9% p.a. at Vodafone3 would allow Vodafone Group to almost double its excess FCF. Budgeting for buying CK Hutchison’s stake, however, may curtail Vodafone’s spending over the coming years.
A strengthening force: MVNOs in UK mobile
8 February 2024There are various reasons why the mobile virtual network operators (MVNOs) have been adding many more subscribers than the mobile network owners over the past couple of years, including the cost-of-living crisis, and the expansion in their addressable market from the shift to online.
MVNOs' bargaining power to secure favourable rates has also improved sharply, with Lyca Mobile's move to the EE network indicative of their strengthened hand.
While some factors in their favour may wane over time, the prospective Vodafone/Three merger would be a marked positive, with the imperative on the operators to fill at least 25-50% additional capacity.
The slowdown in telecoms traffic volume growth post-pandemic has persisted for far longer than a simple hangover effect would imply, and has spread from fixed broadband to mobile in many markets
The eventual emergence of the metaverse and/or AI-generated traffic may mitigate this trend, but it is hard to see growth ever returning to a sustained 30%+ per annum level, with around 10-15% likely to prove the new normal
While far from disastrous for telcos, it does have important implications, such as the need to structure pricing more carefully, focus on network quality over capacity, and be more wary of the threat (or opportunity) from MVNOs, FWA and satellite
Subscribers in retreat: UK mobile market in Q4 2024
10 April 20252024 was the first year in history in which the network operators lost contract subscribers. MVNOs added 1.7m.
In-contract price increases are dominating revenue trends, with a somewhat flatlining outlook on an underlying basis but boosted by accounting technicalities.
We expect the Vodafone3 merger to close on 1 of May which has implications for buyout timing and will prompt higher capex, some early network upsides, and big strategic decisions for both Vodafone3 and BT/EE.
VodafoneThree launch: Astute, tentative steps
12 June 2025VodafoneThree's launch incorporates a number of swift and astute commercial decisions, which is particularly welcome given the challenging balancing act that the company needs to perform
The network upside will be felt quite quickly for Three customers primarily, with protection for Vodafone customers built in. Longer-term, the Government policy shift towards better coverage may require investment beyond the committed £11bn plan
We view some moves as helpful to prospects in the broadband market, others less so, and continue to have question marks about the attractiveness of this segment for VodafoneThreeTelecoms transformed: Vodafone3 merger impact
26 February 2025With the formation of Vodafone3, we envisage continued intense competition at the low end of the mobile market, a ramping up of pressure at the top end over time, and some opportunities in the short term.
New information on spectrum trading confirms the view that BT/EE will be most capacity constrained, but with various strategic options available to it.
Expected EBITDA growth of 9% p.a. at Vodafone3 would allow Vodafone Group to almost double its excess FCF. Budgeting for buying CK Hutchison’s stake, however, may curtail Vodafone’s spending over the coming years.
A strengthening force: MVNOs in UK mobile
8 February 2024There are various reasons why the mobile virtual network operators (MVNOs) have been adding many more subscribers than the mobile network owners over the past couple of years, including the cost-of-living crisis, and the expansion in their addressable market from the shift to online.
MVNOs' bargaining power to secure favourable rates has also improved sharply, with Lyca Mobile's move to the EE network indicative of their strengthened hand.
While some factors in their favour may wane over time, the prospective Vodafone/Three merger would be a marked positive, with the imperative on the operators to fill at least 25-50% additional capacity.
The slowdown in telecoms traffic volume growth post-pandemic has persisted for far longer than a simple hangover effect would imply, and has spread from fixed broadband to mobile in many markets
The eventual emergence of the metaverse and/or AI-generated traffic may mitigate this trend, but it is hard to see growth ever returning to a sustained 30%+ per annum level, with around 10-15% likely to prove the new normal
While far from disastrous for telcos, it does have important implications, such as the need to structure pricing more carefully, focus on network quality over capacity, and be more wary of the threat (or opportunity) from MVNOs, FWA and satellite