Market revenue growth improved to -2%, after the sport-affected -6% last quarter, but was still low by historic standards.
Backbook pricing pressure is still hitting the market, and this will not improve until 2021 at the earliest.
Demand however looks strong; broadband adoption has re-accelerated, and the early signs of ultrafast adoption are encouraging.
The US Department of Justice antitrust case against Google alleges an illegal monopoly in search and search advertising in their home and largest market.
The lawsuit targets Google's control of the Android mobile operating system and exclusive revenue share agreement with Apple, which the EU prohibited in 2018, a decision that Google has appealed.
Alongside antitrust enforcement, legislative initiatives in the EU and UK will create an ex ante antitrust framework for relations between “gatekeeper” platforms and their users and customers, which the US Congress has yet to emulate.
ByteDance is rushing to sell a 20% stake in TikTok Global to Oracle and Walmart at an enterprise value of $60 billion. TikTok otherwise faces a ban in the US on 12 November, subject to legal challenges.
The sale hinges on ByteDance obtaining approval from China to export TikTok’s core technologies. China updated its export control rules to include algorithms (and AI), entrenching a tech cold war with the West.
TikTok has confounded regulatory woes in India and the US, and renewed competition from US tech, to post dizzying user growth in every major internet region where it is available, casting off its image as a niche youth product and entering the mainstream.
Investors warmly welcomed WMG's IPO of non-voting shares in March, valuing the company at $12.8bn, a 388% increase in the company's valuation since Len Blavatnik acquired it in 2011
Investors are placing a bet on music streaming. WMG's strength in the US market due to R&B and Hip-hop in its catalogue allowed it to outperform UMG and Sony on recorded music over 2015-19, an advantage that will dissipate when growth shifts to emerging markets
COVID-19 impacts explains WMG’s 6% decline in recorded music revenues for calendar Q2 2020, despite an 8% rise in digital revenue, as revenues from physical sales (vinyl and CD) sank, and also those from artist services due to the halted 2020 live music season
Market revenue fell 6% in Q1 2020, largely due to lack of sports revenue (which will bounce back), but backbook pricing woes also hit.
Broadband volume growth accelerated though, and may accelerate further as supply constraints ease.
The increase in working-from-home may also enhance demand for ultrafast, the best hope for a return to industry revenue growth.
TalkTalk started its new financial year with revenue growth declining to -8% in Q1, although this is partly lockdown-related, and costs have also declined as churn plummeted.
While backbook pricing continues to be a challenge, new customer pricing continues to firm, which makes its expectation of stable/growing EBITDA for FY2020/21 possible albeit still difficult.
The company expects to launch full fibre products from Openreach imminently, and from CityFibre before the end of the year, with the adoption and eventual economics of these crucial to its medium and long-term future.
Premium sports subscriptions are the primary sector weakness in the current crisis, and they look set to drive fixed operator revenues down 10% next quarter and Sky’s EBITDA down by 60%.
As lockdown eases, latent broadband demand can be more easily sated, and sports subscriptions will bounce back from the September quarter. A surge in working-from-home is likely to increase both the quantity and quality of home broadband demand, with ‘failover’ mobile backup also likely to be of greater interest.
Openreach will benefit from accelerated demand for full fibre, converged operators will be best-placed to offer mobile backup for broadband, and operators with a strong corporate presence will most easily target demand for home-working products.
Apple’s developer conference coincided with a period of unprecedented tension with its developer community, parts of which are chafing under Apple’s rules for the iPhone App Store.
These rules let Apple extract a large portion of the value of the App Store. This revenue is more important than ever to Apple’s growth story, so it has been applying its rules more strictly.
Apple is constrained here by the need to deliver the best product possible to its users, and by the possibility of regulatory intervention.
Market revenue growth plummeted to -2% in Q1 2020, with a lack of premium sports pay TV revenue the biggest factor.
The lockdown is also reducing churn and firming up pricing, but it is unclear how long this will last post-lockdown.
Pay TV revenue trends will continue to dominate next quarter; thereafter the battleground will move to ultrafast.
TalkTalk grew EBITDA by 10% in 2019/20, an impressive cost cutting driven result, with revenue and gross margin falling as the company struggles with the move to high speed.
The company is cautious on 2020/21, indicating only stable EBITDA citing CV-19 related pressures, although the lockdown has also brought much lower churn and an improving price environment.
The move to full fibre could prove challenging in the longer term, but it also brings an opportunity to rebrand away from a pure price focus, the source of much of TalkTalk’s challenges.