Market revenue growth dipped to around zero in Q1, with fierce competition on new customer pricing the major factor
All four of the big operators now suffer from declining ARPU, with existing customer price rises increasingly hard to land given falling prices for new customers
The rapid move to superfast is not helping as much as it should; the operators will hope that they fare better with the move to ultrafast
Q1 results evidenced the downturn that Virgin Media had flagged in February. Consumer cable weakened sharply to just 1% growth vs 3%+ historically, partly thanks to ‘increased promotions in response to market dynamics’
Monetising Virgin’s speed advantage is becoming more challenging. Competition is hotting up for high-speed broadband in particular, fuelled by Openreach targets for smaller players and BT’s full fibre and G.fast rollouts
The company faces two vital strategic decisions – whether to wholesale BT’s fibre products outside its footprint, and whether to allow wholesale access to its own network. The former is likely to have the most legs and offers an alternative to further Lightning extension
Market revenue growth accelerated to 3% in Q4, but it might never reach this level again, being helped by a never-to-be-repeated BT overlapping price rise
With price rises becoming more challenging in general, and superfast pricing under pressure in particular, maintaining/increasing ARPUs is becoming more difficult despite superfast volumes surging
Openreach’s ultrafast roll-out has accelerated, challenging Virgin Media and bringing the prospect of further price premia, but perhaps too late to be of significant benefit in 2019
After strong underlying 2018 results, the more subdued outlook for 2019 is an important shift, driven by regulatory pressure on mobile, higher programming costs, one-offs and softening demand
Lightning is continuing to drive market share gains in new build areas, and should provide a 2ppt tailwind to revenue growth in 2019, but enhanced visibility on the economics of rollout suggests that its conservative approach is a wise one
In existing build areas, Virgin Media is facing-off pricing pressure from TalkTalk on high speed, and potentially from BT on even higher ultrafast speeds, with it moderating pricing and launching a market-beating 500Mbps product in Spring 2019 in response
Across the EU4, pay-TV is proving resilient in the face of fast growing Netflix (with Amazon trailing), confirming the catalysts of cord-cutting in the US are not present on this side of the Atlantic. Domestic SVOD has little traction so far.
France's pay-TV market seems likely to see consolidation. Meanwhile, Germany's OTT sector is ebullient, with incumbents bringing an array of new or enhanced offers to market.
Italy has been left with a sole major pay-TV platform—Sky—following Mediaset's withdrawal, while Spain's providers, by and large, are enjoying continued growth in subscriptions driven by converged bundles and discounts.
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.
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
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
Sky’s Q1 2012 produced strong 16% year-on-year headline growth in adjusted operating profits, although weakening TV product net additions underlined the challenging economic conditions
Churn remains comparatively low in spite of the economic conditions, while Sky’s current round of major investment in entertainment content, now showing the first signs of bearing fruit, could prove vital to holding churn down and stimulating gross additions
Growth in home communications dropped back compared to the level seen the previous autumn, but was still well above that seen in 2009/10 thanks to strong growth in standalone sales