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.

Market revenue growth accelerated to just under 2% in Q4, with broadband growth holding up despite the ending of most pandemic restrictions.

Backbook pricing pressure should continue to retreat in 2022, and ultrafast speed premia should also bolster ARPU as FTTP roll-outs accelerate.

The price increases due in April will further support growth, with BT in particular to benefit, and all will have to be wary of customer backlash.

VMO2 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.

Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.

The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.

In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.

Iliad has reportedly tabled a bid for Vodafone's Italian operations—unsurprising given challenges in that market for both players.

Press reports appear to be a concerted effort to pressure Vodafone to deal. There is the potential to resolve Vodafone's leverage issues, but there are implications for Vantage Towers.

Regulatory approval remains very much in question, but it makes sense to test the system with the potential for very positive read-through elsewhere. If a deal can be struck, it will likely be just the beginning of a long and checkered road.

Higher overall inflation, together with a bigger mark-up than in previous years for some, is implying significant in-contract price increases for the UK telecoms operators—an average of 7.7% for the mobile operators.

Although we may see a 5-6% short-term boost to mobile service revenue growth from these price increases, new-customer pricing remains crucial and could erode the boost from these in-contract rises entirely.

We have been surprised by Ofcom’s interventions to discourage these price increases. The industry needs all the help it can get to fund next generation 5G and full fibre networks, and these in-contract price increases are no guarantee that prices and revenues overall will start to rise.

The UK net neutrality rules are up for review; as usual, the operators are pressuring for relaxation, and there are strong arguments that the competitiveness of UK telecoms markets make such rules innovation-quashing with no consumer benefit.

The chances of mainstream video content providers producing a windfall for telcos are slim, but there are a host of more intensely commercial content providers which have far greater potential to pay extra money for higher quality content delivery.

Future services such as virtual and augmented reality will stretch even FTTP/5G networks; allowing the telcos to develop custom business models to facilitate their delivery may well speed up the development and implementation of the metaverse in the UK.

European mobile service revenue growth recovered to nearly reach positive growth in Q3, improving a whole percentage point over the previous quarter to -0.2%

The main driver of the improvement was continued ‘more for more’ price increases combined with a lack of price wars at the lower end, although the current detente does not feel very stable. Furthermore, the pressure on growth from the general trend towards SIM-only and the consequent lower contract revenue looks unlikely to alter

Revenue growth of around zero as almost achieved this quarter is sufficient for the operators to grow the bottom line, but not to transform their network coverage in the style envisaged by 5G enthusiasts – more substantial growth is needed to cover the costs of such a step-change

UK mobile service revenue growth improved in Q3 to -0.8% from -1.7% in the previous quarter, a welcome turnaround after three quarters of declining growth. Pricing remains firm, data volume growth remains robust, and some of the one-off factors affecting the previous quarter have dropped out

Sky Mobile soft-launched at the end of 2016, and it is taking an aggressive approach with a very deep MVNO technical model with substantial fixed costs, a high advertising budget and ambitious internal subscriber targets. To date the fixed MVNOs have not had a substantial impact on the MNOs, targeting a customer base that is non-core, but with SIM-only on the rise this may change

Looking at recently released network performance statistics, the impact of spectrum disparities is clear, with EE both able to offer faster speeds nationwide due to its large blocks of 4G spectrum, and offer much faster speeds in London. EE also has a lead in geographic coverage, and is planning to push its coverage much further, creating a challenge for the other operators to keep up

UK residential communications market revenue growth accelerated to 5.8% in Q3, from 5.0% in the previous quarter, helped by an overlapping price rise at BT, and supported by firm pricing and accelerating high speed adoption elsewhere

In contrast, volume growth in the core three products continues to slow, with little sign that this will ever re-accelerate. In the longer term we cannot see ARPU growth acceleration continuing to fully compensate, and market revenue growth might also have peaked

With Virgin Media’s continuing network extension and improving pay TV service putting pressure on the other operators, Sky and TalkTalk are protecting themselves by aggressively marketing high speed broadband. Correspondingly, this quarter marks the first time that Openreach’s high speed net adds were mostly derived outside of BT’s retail divisions