The wolves start to circle: Mobile eSIMs in prospect
The UK mobile operators are increasingly vocal about their concerns regarding the tech giants, namely Apple and Google, encroaching on the mobile connectivity market.
eSIMs enhance the case for the tech giants launching their own MVNOs (such as Google Fi in the US) or, perhaps more realistically and concerningly, becoming gatekeepers to mobile airtime subscriptions.
Many things would need to line up for the tech giants to effect this and the MNOs need to stand as one to ensure that they are not successful. Policy makers should be equally reticent.
Related reports
BT: Solid quarter, all eyes on the price increase ahead
11 February 2022BT had a solid Q3, with some mixed results but key metrics all improving, and a (perhaps unsurprisingly) slow post-lockdown recovery the only negative.
The price increase in April should drive dramatic (for BT) revenue and EBITDA acceleration at Consumer, Openreach and BT as a whole, and easily cover pressures within BT’s own cost base.
Longer-term growth is dependent on FTTP performance, which continues to look promising with improving metrics across the board in the quarter, and no news is good news in terms of ISPs signing with competitor networks.
Vodafone: What’s at fault?
3 February 2022The recent shareholder pressure on Vodafone seems to focus on consolidation (where we see approval prospects as only slightly improved), Vantage (where a sell-down may create more value than an industrial merger), and improving operational performance (which continues to struggle).
The zero-growth German fixed business took another step down this quarter and looks set to worsen. This will be central to growth prospects next year and a write-down of the investment looks inevitable.
A culture necessitated by a sprawling asset base may be holding back performance but any break-up would be costly and protracted, with real premium valuations achievable only with consolidation.
Virgin Media O2: Brighter future
25 February 2022VMO2 finished 2021 with muted revenue and EBITDA growth, but stronger subscriber progress, with underlying ARPUs a touch weak but not totally out-of-line with industry trends.
The company has a (justifiably) high level of confidence that this can be turned around in 2022, with a significant boost from price rises, the waning of some temporary effects and backed up by solid subscriber dynamics.
Expecting to not be impacted at all by Openreach’s FTTP roll-out into its current and prospective footprint would however be too confident, and for this reason we remain sceptical of VMO2’s accelerated roll-out ambitions.
H3G’s change of tack over the past couple of years appears to be paying off in terms of customer momentum, but the revenue impact is more questionable and it has undoubtedly proven expensive.
Renewed network investment and a reinvigorated brand will help it to gain traction in new market segments but, even with strong execution, the scale gap looks unlikely to be bridged in a timescale acceptable to its backers.
Regulatory appetite for consolidation appears to be low, with policymakers prioritising number of players over network quality. It may be time for network quality to move up the policy agenda.
Flat-lining in negative territory: UK mobile market in Q3 2021
7 December 2021The boost from annualising the COVID-19 hit dissipated this quarter with service revenues flat-lining at –2.5%. The year-on-year mobility boost weakened and pandemic upsides of lower churn, cost savings and B2B demand unwound.
Q4 looks mixed with an improving year-on-year mobility boost but further unwinding of some pandemic upsides. Spring 2022 has the potential to be the long-awaited panacea with price rises of up to 8% and the prospect of renewed roaming revenues.
The operators continue to seek sources of market repair through price rises (to compensate for regulatory intervention elsewhere) and consolidation—but with little visible support from policymakers as yet.
BT: Solid quarter, all eyes on the price increase ahead
11 February 2022BT had a solid Q3, with some mixed results but key metrics all improving, and a (perhaps unsurprisingly) slow post-lockdown recovery the only negative.
The price increase in April should drive dramatic (for BT) revenue and EBITDA acceleration at Consumer, Openreach and BT as a whole, and easily cover pressures within BT’s own cost base.
Longer-term growth is dependent on FTTP performance, which continues to look promising with improving metrics across the board in the quarter, and no news is good news in terms of ISPs signing with competitor networks.
Vodafone: What’s at fault?
3 February 2022The recent shareholder pressure on Vodafone seems to focus on consolidation (where we see approval prospects as only slightly improved), Vantage (where a sell-down may create more value than an industrial merger), and improving operational performance (which continues to struggle).
The zero-growth German fixed business took another step down this quarter and looks set to worsen. This will be central to growth prospects next year and a write-down of the investment looks inevitable.
A culture necessitated by a sprawling asset base may be holding back performance but any break-up would be costly and protracted, with real premium valuations achievable only with consolidation.
Virgin Media O2: Brighter future
25 February 2022VMO2 finished 2021 with muted revenue and EBITDA growth, but stronger subscriber progress, with underlying ARPUs a touch weak but not totally out-of-line with industry trends.
The company has a (justifiably) high level of confidence that this can be turned around in 2022, with a significant boost from price rises, the waning of some temporary effects and backed up by solid subscriber dynamics.
Expecting to not be impacted at all by Openreach’s FTTP roll-out into its current and prospective footprint would however be too confident, and for this reason we remain sceptical of VMO2’s accelerated roll-out ambitions.
H3G’s change of tack over the past couple of years appears to be paying off in terms of customer momentum, but the revenue impact is more questionable and it has undoubtedly proven expensive.
Renewed network investment and a reinvigorated brand will help it to gain traction in new market segments but, even with strong execution, the scale gap looks unlikely to be bridged in a timescale acceptable to its backers.
Regulatory appetite for consolidation appears to be low, with policymakers prioritising number of players over network quality. It may be time for network quality to move up the policy agenda.
Flat-lining in negative territory: UK mobile market in Q3 2021
7 December 2021The boost from annualising the COVID-19 hit dissipated this quarter with service revenues flat-lining at –2.5%. The year-on-year mobility boost weakened and pandemic upsides of lower churn, cost savings and B2B demand unwound.
Q4 looks mixed with an improving year-on-year mobility boost but further unwinding of some pandemic upsides. Spring 2022 has the potential to be the long-awaited panacea with price rises of up to 8% and the prospect of renewed roaming revenues.
The operators continue to seek sources of market repair through price rises (to compensate for regulatory intervention elsewhere) and consolidation—but with little visible support from policymakers as yet.