Virgin Media: Subscribers strong, ARPU tough to turn
Virgin Media’s subscriber growth continues to be very strong, and it looks like next quarter’s price rise will (at worst) only stall, not stop, the renaissance.
ARPU was hit in Q4 by the postponed price rise, and it will likely remain in decline in 2021, with regulatory pricing pressure and lockdown effects still weighing, despite firm new customer pricing.
Nonetheless, accelerating subscriber growth is expected to drive group revenue growth positive again (helped by B2B growth), and Virgin Media’s main strategic problem—its fibre trilemma—looks like it will be dealt with after the merger with O2, expected to close mid-year.
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Virgin Media: Subscriber growth renaissance continues
11 November 2020Virgin Media’s lockdown subscriber surge continued into Q3, as working-from-home highlights the importance of the faster speeds its network can offer.
ARPU is more challenged, and will get worse next quarter given its forgone price rise, but price rises are back in fashion in the industry, so this problem is likely to prove temporary.
Openreach’s full fibre remains a medium-term threat, but the company is rightly taking advantage while its network superiority remains, with momentum firmly in its favour for now.
The press has reported on an imminent merger of O2 and Virgin Media (UK). This is not likely to be driven by the pursuit of revenue synergies as dis-synergies are more likely if the brands are merged.
Cost synergies are real, albeit a bit tangential. However, in a mature market even modest synergies are worth pursuing.
A full regulatory review may be required but approval is likely. Market impact is somewhat nuanced, with the benefit of a distracted competitor short-term and a larger but still rational operator ultimately.
Market revenue growth improved to -2%, after the sport-affected -6% last quarter, but was still low by historic standards.
Backbook pricing pressure is still hitting the market, and this will not improve until 2021 at the earliest.
Demand however looks strong; broadband adoption has re-accelerated, and the early signs of ultrafast adoption are encouraging.
BT: A bumpy road
15 February 2021BT’s December quarter results were mixed, with revenue growth improving but EBITDA growth worsening, and next quarter will be hit by the effects of lockdown 3 on mobile, with B2B likely to be hit by business failures following the end of furlough.
BT has maintained/nudged up its financial guidance regardless, and there are plenty of positive longer-term signs, with subscriber growth strong in the quarter, pricing pressure easing, and full fibre roll-out and adoption progressing nicely.
Overall, we expect the road to continue to be bumpy, but a recovery by 2022/23 still seems very plausible, ultimately driven by the wholesale and retail benefits of full fibre, and perhaps helped if it can get ‘Digital’ right, a particular challenge historically for BT.
Virgin Media: Subscriber growth renaissance continues
11 November 2020Virgin Media’s lockdown subscriber surge continued into Q3, as working-from-home highlights the importance of the faster speeds its network can offer.
ARPU is more challenged, and will get worse next quarter given its forgone price rise, but price rises are back in fashion in the industry, so this problem is likely to prove temporary.
Openreach’s full fibre remains a medium-term threat, but the company is rightly taking advantage while its network superiority remains, with momentum firmly in its favour for now.
The press has reported on an imminent merger of O2 and Virgin Media (UK). This is not likely to be driven by the pursuit of revenue synergies as dis-synergies are more likely if the brands are merged.
Cost synergies are real, albeit a bit tangential. However, in a mature market even modest synergies are worth pursuing.
A full regulatory review may be required but approval is likely. Market impact is somewhat nuanced, with the benefit of a distracted competitor short-term and a larger but still rational operator ultimately.
Market revenue growth improved to -2%, after the sport-affected -6% last quarter, but was still low by historic standards.
Backbook pricing pressure is still hitting the market, and this will not improve until 2021 at the earliest.
Demand however looks strong; broadband adoption has re-accelerated, and the early signs of ultrafast adoption are encouraging.
BT: A bumpy road
15 February 2021BT’s December quarter results were mixed, with revenue growth improving but EBITDA growth worsening, and next quarter will be hit by the effects of lockdown 3 on mobile, with B2B likely to be hit by business failures following the end of furlough.
BT has maintained/nudged up its financial guidance regardless, and there are plenty of positive longer-term signs, with subscriber growth strong in the quarter, pricing pressure easing, and full fibre roll-out and adoption progressing nicely.
Overall, we expect the road to continue to be bumpy, but a recovery by 2022/23 still seems very plausible, ultimately driven by the wholesale and retail benefits of full fibre, and perhaps helped if it can get ‘Digital’ right, a particular challenge historically for BT.