VMed’s Q4 results were again mixed, with underlying cash flow growth hit by high capital expenditure primarily relating to accelerating TiVo box installations

But this strong take up of next generation TV, and real progress at the Mobile and Business divisions, give us confidence that the company’s strategy is working

Management guidance of further cash flow growth from the second half of 2012 is credible, though we continue to expect underlying growth to be limited

Vodafone Europe’s underlying revenue growth declined by 0.7 percentage points in the December quarter, with its Southern European operations continuing to struggle in poor economic environments

Few competitors have reported their results so far, so it is hard to conclude on Vodafone’s competitive performance as yet, but we expect that the slowdown will prove market-wide

The company has stuck to its full year profitability targets, suggesting that strong cost cutting is making up for top line weakness

The launch of Netflix in the UK and Ireland has ignited the debate on the threat from over-the-top video to pay-TV services from Sky, Virgin Media and BT

Unlike in the US, Netflix’s UK prospects and those of competitors such as Lovefilm, are fundamentally limited, given the availability of low priced pay-TV with strong on-demand components included for free

The impact of Netflix on the UK pay-TV industry is therefore likely to be even smaller than the (hard to discern) effect it has had in the US

Virgin Media’s plan to double the line speed of most of its broadband customers is the latest in a series of moves to retain its position as the leading high speed internet service provider in the face of BT’s deployment of next generation access (NGA)

The move presages further price increases and an upgrade to offers for new cable customers, but is in the first instance about retaining the large existing base of cable customers currently on 10 Mbit/s

The £150 million or so of incremental capex required is small in the context of NGA, but the impact both on cable churn and demand for higher speeds across the wider market is by no means certain

As Phase 1 digital shift from broadcast analogue to digital nears completion, individual platform growth trends have almost flattened out

The most likely area of change in platform trends over the next ten years concerns basic only subscription pay-TV, where we anticipate an overall increase in the total pay-TV base and change in platform balance arising from the introduction of low price basic packages

Phase 2 digital convergence between TV and the internet promises to take many years to reach maturity, and many questions need to be addressed in order to be able to assess its potential impact on the current broadcast TV marketplace over the next ten years.

In this presentation we show our analysis of trends in UK broadband and telephony to September 2011, together with our latest projections for residential broadband subscribers and market shares to 2016. Highlights for the 2011 September quarter include accelerating growth in the number of subscribers to high speed broadband, and the continuing increase in market share of BT Retail and BSkyB at the expense of virtually all other players. This quarter’s edition includes a look at high speed broadband pricing, and our take on the new guidelines on broadband advertising.

Although we continue to expect broadband subscriber growth to drop, we expect growth to be supported by increasing adoption among older and/or lower income householders, who are becoming more aware of the benefits of going online. We have also increased our residential market share projection for BT Retail, which has gained real momentum over the past year, with brand strength among late adopters and effective marketing of high speed broadband both having an impact.

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

Spotify has just passed the 2 million subscriber mark in Europe and the US, and could reach 2.5 million by the end of 2011

Smartphone adoption and partnerships with MNOs and ISPs have proven a key driver of subscription in Europe for Spotify, which lacks a telecoms partner in the US. We think subscription is profitable

Spotify’s lower usage caps on the freemium tier will help compress total losses in 2011 in relation to the £25 million reported in 2010, despite the US launch

Vodafone Europe’s service revenue growth improved marginally in the September quarter, a very solid performance under tricky circumstances, helped by good competitive performances and judicious pricing measures

The combined Europe and group common function EBITDA margin was again held flat, despite continued smartphone adoption pushing up handset costs, with strong cost control again evident

Pricing, competitive, regulatory and cost trends are all going well; but macroeconomic trends are clearly not, and are likely to make an acceleration in the second half of the year very difficult

Q3 results were contradictory, with accelerating demand for enhanced services and resilient revenue, but high churn and weak growth in fundamental cash flow

Cost increases struck us as justifiable in the longer term and were in some cases temporary. We share management’s confidence that there is better news to come, particularly at Virgin Media Business

Nonetheless, we remain of the view that future cash flow growth is likely to be significantly lower than that seen over the past two years, particularly given the deteriorating economic outlook