Service revenue growth was up just 0.1ppts to 2.0% this quarter, as price rises in the UK and the peak of the roaming boost offset weakness elsewhere.
Price increases to combat inflationary cost pressures are gathering momentum—a potential revenue cushion as roaming tailwinds diminish and challenging economic conditions weigh.
Vodafone is battling strategic issues in most of its main markets—significant change in strategy will be required from the new leadership.
European mobile service revenue growth increased by 1ppt to +1.6% this quarter, with this improvement largely driven by higher-than-inflation price increases in the UK.
The outlook for Q3 is mixed with an increased roaming boost expected, but the B2B sector will remain challenging and the impact of the rollout of out-of-contract notifications in EU countries will mount.
There are signs of some upward pricing movement beyond the UK, particularly in Spain as the operators seek to cushion the blow of rising costs and inevitable economic pressure.
European mobile service revenue growth was positive for the first time in five years this quarter as a resurgent mobility boost combined with the return of roaming revenues.
Q2 is set to be a mixed bag, with inflation-plus price increases expected in the UK, an elevated boost from the roaming recovery, but also some weakness in the B2B market.
We are also seeing the early impact from end-of-contract notification rules, particularly in Germany, and we expect ARPU pressure and churn to pick up elsewhere as the impact becomes more widespread.
On 12 May 2022, Enders Analysis co-hosted the annual Media and Telecoms 2022 & Beyond conference with Deloitte, sponsored by Barclays, Financial Times, Meta, and Deloitte Legal
With up to 500 attendees and over 40 speakers from the TMT sectors, including leading executives, policy leaders, and industry experts, the conference focused on regulation, infrastructure, and how new technologies will impact the future of the sector
These are edited transcripts of Sessions 4-6 covering: European media, sustainability in the TMT sector, and advertising mega-trends. Videos of the presentations are also available on the conference website
On 12 May 2022, Enders Analysis co-hosted the annual Media and Telecoms 2022 & Beyond Conference with Deloitte, sponsored by Barclays, Financial Times, Meta, and Deloitte Legal
With up to 500 attendees and over 40 speakers from the TMT sector, including leading executives, policy leaders, and industry experts, the conference focused on regulation, infrastructure, and how new technologies will impact the future of the industry
These are edited transcripts of Sessions 1-3 covering: regulation and legislation, PSB renewal, and clarity in the age of non-linear transmission. Videos of the presentations are also available on the conference website
Whilst we remain sceptical of the churn reduction benefits of fixed/mobile convergence, the pandemic and a more astute approach from the operators is enhancing the case for it in the UK.
Creating the impression of a giveaway whilst minimizing the effective discount is key, as is extracting any loyalty and cost benefits.
Even if well executed, any upsides are likely to be modest. Operators are right to keep discounts to a minimum and to avoid M&A premia predicated on fixed/mobile convergence synergies.
Mobile growth improved very marginally to -3.6% this quarter as roaming revenues were harder hit and competitive intensity bounced back, but usage recovered from the lockdowns in Q2 and cuts to intra-EU calls were annualised.
Italy’s fortunes took a turn for the worse as roaming hit particularly hard and Iliad resurged. After a spate of downgrades to the outlook last quarter, there were some tentative upgrades in Q3 although the tone remains cautious.
The diminished drag from roaming is the primary positive driver from here. Although lockdowns of some degree are in place in Q4, their impact will be less severe than those in Q2.
With a lack of live sport, the lockdown weighed on incumbent pay-TV platforms’ subscriptions. SVOD providers leveraged their cheap positioning—Netflix and Amazon Prime Video now rank above other subscription services in Europe, and Disney+ had a successful launch.
Incumbents—Sky, Canal+, Movistar+—all pursue a twin-track strategy. They are positioning themselves as gatekeepers thanks to service bundles, while redirecting resources away from sports towards original series.
European productions are increasingly garnering audiences outside of their home markets, regardless of the production language. Netflix is a major conduit for European exports, due to personalisation of the interface and high-quality dubbing.
Disney’s suite of UK children’s channels will go off air in September. Disney was unable to reach a deal with Sky and Virgin for the carriage of the Disney Channel, Disney XD and Disney Junior.
It is unsurprising that Sky and Virgin have felt able to walk away from negotiations to carry the channels—they have performed terribly over the past few years, having been well outperformed by comparable kids' channels.
Disney will continue to have a linear footprint with National Geographic and FOX, however the cessation of its kids’ linear operations has come before its time. Disney+ is doing well, however it is a pit of foregone revenues, while the recent performance of Disney channels raises questions as to the value of some of Disney’s non-film IP.
European mobile service revenue growth strengthened very slightly to -0.3% this quarter but, with many positive and negative factors at play, it would be wrong to conclude that we evidenced a convincing improvement in momentum.
Most operators have reiterated their financial guidance in spite of COVID-19 but there is caution from Vodafone and those exposed to sports rights (BT and Telefonica).
The outlook benefits from continued lockdown measures (reducing churn and spin-down) and the annualisation of some financial drags from the middle of next quarter. However, competition in Spain remains intense and the sector is exposed to any economic downturn.