TTG’s full year results were, in the most important respects, solid, despite customer service issues and high churn caused by the migration of former Tiscali customers onto a single set of platforms
We remain cautious about the speed with which churn can be reduced, but there is little sign of the problem spreading beyond the former Tiscali base
Operating leverage and cost reduction have been impressive and give us confidence that new financial guidance will be met, although other sources of growth remain elusive
Fujitsu UK’s announcement of plans to provide wholesale fibre-to-the-premise (FTTP) to five million premises potentially poses a significant threat to BT
However, deployment is contingent on the project attracting at least 60% of the available state funding and significant improvement by Openreach of its terms for Physical Infrastructure Access (PIA)
In addition, ISPs using Fujitsu’s network may find it difficult to attract retail market share from BT based on a high speed broadband proposition. However, should Fujitsu deploy at scale, the project could prove positive for Virgin Media
Some of Ofcom’s proposed wholesale charge controls for Openreach fixed access services sound stringent
However, we estimate that the overall financial impact on BT and other players is likely to be very small
We do not expect the proposals to result in changes to many retail prices, but they should tilt the playing field slightly in favour of BT Retail’s competitors, particularly smaller providers of broadband and business services
European regulators are struggling to find the right balance between promoting the competitive impact of local loop unbundling (LLU) and encouraging investment in next generation access networks by incumbents and others
In continental Europe, regulators have tended to focus on the provision by incumbents to competing providers of access to physical infrastructure. This affords competing providers a high degree of product differentiation, but tends to be relatively uneconomic, to the detriment of unbundlers in markets where the cable operator is strong
In the UK, the regulator has tended to focus on the provision by BT Openreach of bitstream access at a price set by the market
Ofcom is proposing to design the 800MHz and 2.6GHz spectrum auctions to ensure that the UK mobile market remains at four players, through a complex set of rules largely designed to help H3G get the spectrum it needs to remain competitive
However, the sting in the tale is that Ofcom expects H3G to pay around £600m for this spectrum, which it may not want to do, and it is not clear what the backup plan would then be
We expect the general theme of regulators seeking to protect a fourth player to repeat across Europe and across regulatory areas, especially as the US market may consolidate towards three with AT&T’s proposed takeover of T-Mobile USA
European mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative
While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France
The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months
In this short presentation we show our analysis of trends in UK broadband and telephony to December 2010, based on the published results of the major service providers. We include our own estimates where reported data is incomplete. This quarter’s edition includes a look at Ofcom’s recent research into broadband speeds and its response to the Advertising Standards Authority’s review of broadband advertising.
TalkTalk Group (TTG) lost broadband customers for the first time in its history in the quarter to December due to dissatisfaction among former Tiscali customers, and to a lesser extent, at AOL UK
But gross additions appeared to remain healthy and ARPU growth was strong, holding group revenue flat
The group remains on track to make guidance for the financial year to March. Beyond that, we remain optimistic about the prospects for further cost reduction, but reducing churn remains a daunting prospect
UK broadband net additions in Q3 2008 fell sequentially, the first time this has happened in a third quarter. Q3 net adds almost halved year-on-year to 320,000
Prisa, the 98% owner of Sogecable, has put Spain’s leading pay-TV platform Digital+ up for sale in order to make a large reduction in its debts