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

UK mobile revenue growth was steady in Q4 at -3.9%, only a fractional drop from -3.8% in the previous quarter, with underlying growth unchanged, and contract subscriber growth and ARPU trends also unwavering, though the market solidity masked more dramatic developments in service offerings with the launch of the new EE umbrella brand and its 4G service

With the 4G spectrum auction now concluded, we can expect Vodafone and O2 to launch 4G services in the summer and H3G in the autumn; EE is looking to stay one step ahead with its recently announced speed doubling, and the intensity of marketing around 4G may even help its own service

While 4G will provide the talking points, actual financial results in 2013 will depend more on 3G base level pricing remaining firm; the signs so far are positive, with O2 having nudged up its core pricing, and mid-contract price increases scheduled by O2 and EE

German unbundlers are in decline, unable to match cable for price or bandwidth, or to invest in new fibre networks. Vodafone, the second largest unbundler, must choose between consolidating and divesting Merging with Kabel Deutschland would deliver fixed line synergies – with high execution risks. But, based on the French and Spanish experiences, we doubt that a quad play strategy (synonymous with a price war) would generate value Mobile operators’ fixed line ventures are also in decline elsewhere in Europe, but cable is not always to blame, with pure play fixed line altnets also tending to outperform them, suggesting that genuine cross-selling advantages are marginal at best

Both subscriber and revenue growth in the UK home communications market perked up in Q4, with an easing of weather related supply-side constraints helping the former and firm pricing helping that latter. We expect both trends to continue into 2013

BT’s high speed broadband net adds accelerated in the quarter, as did that of the other DSL operators, albeit from a much lower base. High speed broadband is already a mass market phenomenon within the BT and Virgin Media subscriber bases, with it only a matter of time before this spreads further

Virgin Media had a record quarter, as it continues to benefit from being able to offer high broadband speeds at very competitive prices, with its planned acquisition by Liberty Global unlikely to change its strategy or performance going forward

Virgin Media had a very strong Q4, with subscriber net adds improving across all main products, ARPU solid, and margins improving to record levels, with revenue growth set to accelerate in the coming quarters

This was overshadowed by the announcement that Liberty Global is planning to acquire Virgin Media to form the world’s largest cable TV subscriber base

The impact of this acquisition on the rest of the UK market would be minor, as Liberty Global is likely to follow the current Virgin Media approach on content, network and pricing

Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 15 January 2013. The event featured talks by 14 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts of the talks given by nine of those speakers: Sir Martin Sorrell, CEO, WPP Tim Davie, Acting Director General, BBC Dan Cobley, Managing Director, Google UK & Ireland Michael Tobin, CEO, Telecity Group Liv Garfield, CEO, Openreach Dido Harding, CEO, TalkTalk Group Victor Zhang, CEO, Huawei UK & Ireland Cindy Rose, Executive Director of Digital Entertainment, Virgin Media Q&A: Dido Harding, Victor Zhang and Cindy Rose Ed Richards, CEO, Ofcom

Slides from the presentations by the following speakers at the Media & Telecoms: 2013 & Beyond conference on 15 January 2013:

•Sir Martin Sorrell, CEO, WPP
•Michael Tobin, CEO, Telecity Group
•Liv Garfield, CEO, Openreach
•Dido Harding, CEO, TalkTalk Group
•Victor Zhang, CEO, Huawei UK & Ireland
•Cindy Rose, Executive Director of Digital Entertainment, Virgin Media

European mobile market service revenue growth dropped again in Q3, by 1.9ppts to -6.2%. This was not helped by a substantial increase in the MTR impact, driven by a big cut in Italy, but underlying revenue growth still fell by 1.3ppts In stark contrast to Europe, the US mobile market continues to grow apace, with there being over 10ppts between the growth rates of the two regions. The most obvious difference between the markets is the very much higher levels of capex spent by the US incumbents, which drives their superior network quality and coverage, and hence price premia, and hence superior growth The European incumbents have not (yet) used their greater ability to spend on capex to increase the spending gap with smaller operators, with 4G launches (mostly) being low profile with low initial coverage (the UK being a notable exception to this). While this is an understandable approach given the prevailing macroeconomic conditions, it does mean that closing the growth gap with the US remains a distant prospect

After a host of TV-related announcements/launches last quarter, the main feature of the last three months has been price increase announcements, with all four of the large operators announcing a significant price increase(s) to take effect between December 2012 and February 2013

High speed net adds remained strong at BT, and grew dramatically at the other DSL operators, although the latter figure remained very low in absolute terms. In time we expect strong adoption by Sky and TTG subscribers, but it may take years rather than months for consumer expectations of what is a ‘standard’ broadband speed to change

TTG reported some encouraging but not market-changing early figures for its new TV product, and BT is expected to launch a product with extra linear channels within the next few months. We continue to believe that both companies’ products will struggle to win subscribers off Sky and Virgin Media, but that they may have appeal to a modestly sized group of consumers that are not currently pay TV customers

The linear TV broadcast industry has kept its oligopolistic structure remarkably intact over the last 50 years against a background of much technological innovation and re-regulation, but now faces a new wave of innovation that promises growth of non-linear at the expense of linear True disruption can only occur by solving the device challenge of developing on a mass scale new, compelling and innovative ways to access content, but so far non-linear has achieved a very small share of total viewing while linear viewing levels are as high as ever Although non-linear viewing may become substantial, it is unlikely to result in fundamental change in the distribution value in the industry