Accelerating print advertising declines in 2016 are placing pressure on local newspaper publishers to deliver faster online growth

However, digital growth is being supported yet compressed by Google and Facebook; we estimate SME expenditure on Google is roughly 2x the local press, and we expect SME spend with Facebook to match local newspaper advertising revenues in two to three years

Publishers need to grow consumer registrations and subscriptions, digital display and also digital marketing services, in partnerships with the tech giants – but first they have to convince consumers they have relevant use-cases that global platforms cannot replicate

Secretary of State (SoS) Karen Bradley has made an initial decision to refer 21CF’s bid for Sky to the Competition Markets Authority (CMA) for a detailed consideration of media plurality concerns, to be finalised in the near future

The issue at hand is the potential increase in the influence of the members of the Murdoch Family Trust (MFT) over the UK’s news agenda and political process. The SoS rejected the remedy for Sky News brokered by Ofcom

Ofcom’s non-negative decision on the fitness and propriety of 21CF to hold Sky’s broadcast licences cleared another hurdle in the event the merger is finally accepted

UK mobile service revenue growth continued to improve, with EE now the clear leader in service revenue growth terms. The rate of improvement has started to slow, but pricing remains solid and data traffic continues to grow healthily

EE’s performance was helped by robust subscriber growth but mainly driven by its very strong ARPU growth, which is in turn driven by ‘more-for-more’ pricing and a service/content tiered pricing model. Others are starting to follow this approach

The short/medium term outlook remains healthy, with the price increases made in Q2 likely to more than compensate for roaming cuts in the latter part of the year.  Looking further forward, the launch of 5G could be disruptive due to the introduction of copious extra spectral capacity, and therefore the results of the upcoming auction will be key for the sector post-2020

Vodafone Europe’s mobile service revenue growth declined again to -1.0% from -0.6% in the previous quarter, but across the core top 4 markets it was essentially flat at -0.8%, and signs are encouraging for it improving next quarter

Contract subscriber share has (at last) stabilised across its top 4 markets, and continuing improvements in NPS suggest that Project Spring investments are finally being reflected in subscriber sentiment

The short-term outlook is positive with both subscriber growth and ARPU looking solid at worst. The longer-term results of market consolidation are the main threat, with powerful competitors potentially being created

Cross-device identity profiles are used to stitch together fragmenting online ad audiences, but also to enable new links between advertising and marketing, across European markets

This moves value from media itself to understanding each consumer and how they access content and services on proliferating connected devices

By 2020 we predict that 58% of all UK online ad buys by value will make use of high-quality audience IDs, led by the largest advertising platforms but limited by privacy regulation and cost

UK mobile service revenue growth was -0.1% in Q4, a 0.6ppt improvement from the previous quarter. This was helped by some modest price firming, continued strong data growth, and some inflation in handset prices

EE was the strongest growing operator after being the weakest just 12 months ago, with its efforts to improve customer service, network performance and perceptions of network performance starting to pay off. H3G had a strong H2, with strong customer additions while not sacrificing ARPU, although it is still clearly taking steps to manage capacity demand. O2 had another solid performance with a modest improvement in service revenue growth, and Vodafone suffered from weak ARPU primarily due to pricing pressure in the business market

The outlook for market service revenue growth is fairly positive, with ARPU-enhancing pricing moves in evidence, supported by continuing strong data volume growth, and existing customer price increases due to take effect from Q2 2017

Amazon’s marketing services bring in a growing stream of direct, high-margin revenue, but their main role is still in supporting vendor partnerships

Amazon uses customer profile data to profit from its own media and that of others, illustrating the value of a direct customer relationship in online advertising

In the future, Amazon’s moves into video content and voice interfaces are likely to significantly expand ad inventory, but maintaining the trust of shoppers is not straightforward

Vodafone Europe’s mobile service revenue growth worsened to -0.6% from -0.2% in the previous quarter, the first deterioration following at least nine quarters of consecutive improvement, with the UK particularly weak

The company could nonetheless grow profits handsomely if revenue growth stabilises at this level, with more clarity on the medium term prospects for this likely to come with next quarter’s results and guidance for 2017/18

Our main concern continues to be the company’s declining subscriber share, particularly in consolidating markets where its historic advantages of having high market share may be rapidly eroded