TikTok has been dealt a devastating blow as a US bill has been signed into law forcing owner ByteDance to sell within a year or face its removal from app stores. 

The stakes are higher than in 2020—China's opposition to a divestment will make an optimal sale harder to conclude, so all sides must be prepared for a ban.   

The TikTok bill introduces extraordinary new powers in the context of the US and China's broad systemic rivalry, though online consumer benefits will be limited.  

Mobile service revenue growth was down 1.2ppts in Q4 as the impact of 2023’s price rises continued to wane.

Growth will wane further into Q1 and with spring price rises being 7-9ppts lower than last year’s, we don’t foresee a revenue boost in Q2.

With negative publicity and upticking churn from inflation-linked price increases, Ofcom’s review of the mechanism may prove to be a blessing in disguise.

With the returns of the mobile industry at the forefront of a range of policy issues including in the EC White Paper and the prospective Vodafone/Three merger, we take a fresh look at its economics.

Higher network costs due to government and subscriber demands are hitting the sub-scale operators disproportionately, limiting their ability to tailor their network to their market position.

Our analysis of the UK market suggests that H3G would need a market share of 23% at today’s price levels to earn even the most basic return on capital—an unrealistic prospect. With the fixed market likely to evolve to a patchwork of one/two/three-player areas, three nationwide mobile networks could still be a strong result.

Direct greenhouse gas emissions from the UK telecoms sector equate to around 0.1-0.3% of the UK total. Most operators have set targets to reach net zero across their direct emissions in the next 10-20 years, with the move to electric vehicles an obvious win.

Network upgrades to 5G and fibre have the potential to cut emissions from electricity by a factor of 10, and consolidation offers further decarbonisation upside.

The industry could enable emissions savings in other sectors equivalent up to 30x its own by averting the need to travel and through IoT applications, with the latter requiring careful commercial assessment given the financial constraints in the industry.

VMO2 ended 2023 with strong ARPU and EBITDA growth, meeting its (revised) guidance for the full year, but saw receding subscriber momentum across both fixed and mobile.

2024 will be much tougher across the industry and for VMO2 in particular, with its revenue expected to be flat at best, and waning boosts from price rises and synergies coupled with a series of technical factors shrinking EBITDA.

The company has promised new commercial initiatives in 2024, and thereafter we see strong potential in it maximizing the use of its network and retail arms via breaking the long-standing lock between them, although the formation of NetCo is neither a necessary nor sufficient step for this.

Ofcom’s final statement on net neutrality addresses most of our prior concerns, leading to opportunities for UK telcos to effectively address internet congestion, and monetise their network capabilities.

BT is looking to take advantage of its new freedoms with new TV distribution services, which could save network capacity, improve user experience and earn it a share of the content distribution value chain.

We think that there are many other attractive opportunities, but telcos will have to work hard to sell any of them given the need to work together and reverse the bad blood that has developed with many content providers.

The boost from annualising the COVID-19 hit dissipated this quarter with service revenues flat-lining at –2.5%. The year-on-year mobility boost weakened and pandemic upsides of lower churn, cost savings and B2B demand unwound.

Q4 looks mixed with an improving year-on-year mobility boost but further unwinding of some pandemic upsides. Spring 2022 has the potential to be the long-awaited panacea with price rises of up to 8% and the prospect of renewed roaming revenues.

The operators continue to seek sources of market repair through price rises (to compensate for regulatory intervention elsewhere) and consolidation—but with little visible support from policymakers as yet.

Google has lost its appeal of the European Commission’s antitrust ruling of 2017 that it had abused its position in general search to favour Google Shopping, its Direct-to-Consumer (DTC) channel for merchants, in relation to price comparison aggregators. 

Since the case was lodged in 2010, price comparison has receded as the key to consumers’ online purchases, also motivated by influencers, reviews, and browsing. Merchants use YouTube and Instagram to build brands, Facebook to launch products, and Google Shopping as the key alternative to Amazon for direct response.

The EU’s antitrust regime has once more solved yesterday’s problem, but this will shift for Big Tech to an ex-ante regime when the landmark Digital Services Act and Digital Markets Act come on-stream.

Sky has started to reap benefits from its substantial reduction in sports rights costs in Italy and Germany, helping to grow group EBITDA by 76% in Q3, despite a slight drop in revenue

With this change in strategy, the business model in Italy is undergoing an upheaval. Meanwhile, the UK continues to perform well, with further promise on the horizon thanks to the bold launch of Sky Glass

This streaming TV is a future-proofing leap forwards in Sky’s ever-more-central aggregation strategy, starting the business down the long path to retiring satellite, though this is probably still over a decade away

Sky’s revenue was up 15% in Q2, back to pre-COVID levels despite some lingering pandemic effects such as most pubs and clubs remaining closed. EBITDA fell by a third, driven by higher costs from sports rights, since very few live sports events took place in Q2 2020

The impact of “resetting” football rights is already evident in Germany and Italy, with 248k net customer losses across the group despite growth in the UK. However, Sky will make substantial savings, and we expect this will more than offset lost revenues

Meanwhile, Sky continues to strike deals with other content providers, solidifying its position as the leading household entertainment gatekeeper. In time, apps for NBCU’s Peacock, ViacomCBS’ Paramount+, ITV Hub, and, in Germany, RTL TV Now and DAZN, will all be aggregated within Sky Q