UK football rights values have pulled further away from European peers in a stagnant market, as telcos have withdrawn and tech companies remain selective bidders.

Sky and Canal+ have tied down key contracts until towards the end of the decade, while DAZN now has domestic rights for four of the top five European football leagues.

Tech players want live sport, but have distinctive demands and without new monetisation models they will not challenge pay-TV incumbents.

Broadcasters are accelerating their transformation into digital-first businesses. We estimate that 17% of broadcasters' viewing on the TV set will have been delivered by IP this year.

FTA platforms have a more complex migration pathway to IP than pay-TV. Given the existing strength of DTT, and its older demographic profile, DTT will account for more broadcaster viewing hours than satellite/cable combined by 2029.

By 2040, we estimate that half of all broadcaster viewing will be via IP, with broadcast delivery remaining strong due to the live schedule.

Service revenue growth dropped off by 2.7ppts this quarter, and into negative territory, as operators in all markets suffered weaker growth
 

Operators in France and the UK implemented price increases this quarter but re-contracting absorbed any positive revenue impact. In Italy, regulatory intervention thwarted operator plans to raise prices
 

Increasing competitive intensity in France and Germany comes at a time when operators can ill-afford ARPU dilution and high churn
 

Service revenue growth was broadly flat at 1.7% as improvements in Germany offset weaknesses in Italy.

The impact of price increases has been mixed, with subscriber losses dulling their upside, and the mixed picture looks set to continue into Q2.

The market continues to be challenging with elevated competition at the low end, pressure from some regulators to increase network coverage, and a somewhat soft EBITDA outlook.

On 4 June 2024, Enders Analysis co-hosted the annual Media and Telecoms 2024 & Beyond Conference with Deloitte, sponsored by Barclays, Financial Times, Salesforce and Adobe. 

With over 580 attendees and over 40 speakers from the TMT sector, including leading executives, policy leaders, and industry experts, the conference focused on how new technologies, regulation and infrastructure will impact the future of the industry. 

This is the edited transcript of Session Three, covering: consolidation in the telecoms sector; fixed-mobile convergence; and the future of the fibre industry. Videos of the presentations are available on the conference website.

Market revenue growth was maintained at 1.6% in Q4, helped by strong underlying ARPU, mitigated by weak volume growth.

Lower price rises will likely slow market revenue growth by c.1-2ppts next quarter, with BT being slowed the most at c.5ppts.

The market is being hit by lacklustre demand, growing altnets and persistent price competition, with these factors likely to persist in the short term.
 

Vodafone's promise of growth from FY26 has credibility given some headwinds specific to FY25 and some tailwinds emerging thereafter. 

In the meantime, the issues over the coming year extend beyond TV losses—with fixed in Germany proving difficult to turn around and the challenge from diminishing in-contract price increases is a significant one (for many telcos). 

Currency movements continue to absorb all notional growth (and some) and look set to continue to do so next year. With the company's FCF just half what it was two years ago, it is little wonder that Vodafone halved its dividend payout.

The German football league has suspended its media rights auction after protests by DAZN over the award of the top package.

DAZN surprised the market by aiming to become the Bundesliga’s primary broadcaster.

The situation in Germany reveals the contradictory impulses weighing on leagues at rights auctions.

Service revenue took a dip in Q4 to 1.5% as a waning price rise impact in the UK combined with the loss of positive one-offs in Germany.

We expect growth to slow further through 2024 as many operators implement lower index-linked price rises which are also coming under increasing regulatory scrutiny.

Vodafone has made progress on its turnaround plan—striking deals for its Italian and Spanish units—but it is not yet out of the woods, with ongoing challenges in Germany and approval still uncertain in the UK.

The German football league’s rights tender for its 2025-29 cycle is designed to create competitive tension between Sky and DAZN.

Based on precedents and public statements, we would expect Sky to increase coverage and DAZN to scale it down without a head-on bidding battle.

With low international potential, the Bundesliga can only count on its deep fan base to meet competitive pressure from the Premier League.