Enders Analysis co-hosted the annual Media & Telecoms 2017 & Beyond conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 2 March 2017.

This report contains the slides used by Tom Mockridge, Matthew Kirk, Andrew Griffith, and Geoff Moelis.

Enders Analysis co-hosted the annual Media & Telecoms 2017 & Beyond conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 2 March 2017.

The day saw over 450 senior attendees come together to listen to 30 leaders and senior executives of some of the most creative and innovative businesses in the media and telecoms sector, and was chaired by David Abraham.

This report provides edited transcripts of the presentations and panels, and you will find accompanying slides for some of the presentations here.

Videos of the presentations are available on the conference website.

European mobile service revenue growth was unchanged in Q4 on the previous quarter at -0.1%, tantalisingly close to growth but just held back by renewed mobile termination rate cuts in Germany

‘More-for-more’ tariff changes are becoming increasingly commonplace, as operators increase data bundle sizes to allow for volume demand growth, but nudge up pricing as partial compensation.  This has not yet translated into positive revenue growth across Europe as a whole, but increasingly looks like it will do, with a number of moves made in early 2017

The quarter saw completion of two M&A deals in Spain and Italy with MasMovil completing its acquisition of Yoigo, and H3G Wind completing their joint venture to form Wind Tre. While the former is unlikely to alter the market dynamics much, the latter, resulting in the entry of Iliad in Italy, has the potential to disrupt the pricing dynamic in that market, although ultimately it will be limited by Iliad’s initial MVNO economics and dearth of spectrum

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

UK residential communications market revenue growth fell to 3.3% in Q4, from 5.4% in the previous quarter. The slowdown was mainly caused by BT’s overlapping price rise dropping out, but there was also ARPU weakness at Sky (due to price rise timings) and TalkTalk (due to re-contracting customers)

Volume growth in the core three products continued its decline, with broadband reaching saturation, line rental suffering from Virgin’s broadband solo offering and pay-lite TV offers losing momentum. Looking forward, recent and upcoming price increases should allow some recovery from current revenue growth levels

However, competitive pressures are increasing. Virgin Media’s network extension continues to accelerate, TalkTalk is attempting to stabilise its base and new customer pricing has fallen substantially since December 2016 – causing a dramatic disparity in new/existing customer pricing. The higher churn and/or reduced ARPU this is likely to cause, combined with slowing market volumes, indicate that market revenue growth is unlikely to recover to the 5-6% it enjoyed for most of 2015 and 2016

The past 14 months have seen a flurry of activity from the major UK television platforms, with all but one releasing a revamped version of their television offering; a neccessary reaction to the rise of VOD consumption and the threat this poses to traditional models

The result is 'connected' offerings, with the major players aiming to exploit the impact of this technology by seamlessly integrating on-demand capabilities, and in doing so mitigate the further shockwaves resulting from its emergence

No offering is likely to single-handedly alter the current subscriber landscape radically; with the pay platforms' each taking a unique—and to a degree—entrenched path that affirms its core consumer base, the greatest shifting of sands will likely come from changes in consumer trends or content quality

TalkTalk had a weak quarter, as was pre-warned, with the decline in the broadband base accelerating and consumer revenue growth of -6% slightly worse than the previous quarter

Guidance was however very bullish, with the company confident that it can bounce back to return to positive net adds in the March quarter, while still hitting its profitability guidance

This looks a difficult task in a market which is still highly competitive, but if it can achieve it, the longer term aim of a stable customer base and growing revenue and profits looks much more plausible

European mobile service revenue growth recovered to nearly reach positive growth in Q3, improving a whole percentage point over the previous quarter to -0.2%

The main driver of the improvement was continued ‘more for more’ price increases combined with a lack of price wars at the lower end, although the current detente does not feel very stable. Furthermore, the pressure on growth from the general trend towards SIM-only and the consequent lower contract revenue looks unlikely to alter

Revenue growth of around zero as almost achieved this quarter is sufficient for the operators to grow the bottom line, but not to transform their network coverage in the style envisaged by 5G enthusiasts – more substantial growth is needed to cover the costs of such a step-change

UK mobile service revenue growth improved in Q3 to -0.8% from -1.7% in the previous quarter, a welcome turnaround after three quarters of declining growth. Pricing remains firm, data volume growth remains robust, and some of the one-off factors affecting the previous quarter have dropped out

Sky Mobile soft-launched at the end of 2016, and it is taking an aggressive approach with a very deep MVNO technical model with substantial fixed costs, a high advertising budget and ambitious internal subscriber targets. To date the fixed MVNOs have not had a substantial impact on the MNOs, targeting a customer base that is non-core, but with SIM-only on the rise this may change

Looking at recently released network performance statistics, the impact of spectrum disparities is clear, with EE both able to offer faster speeds nationwide due to its large blocks of 4G spectrum, and offer much faster speeds in London. EE also has a lead in geographic coverage, and is planning to push its coverage much further, creating a challenge for the other operators to keep up

TalkTalk’s broadband subscriber decline has re-accelerated, with retail weaker than wholesale, and its consumer revenue is declining at 6%. This is partly due to price change timings, partly due to last year’s cyber-attack, but also partly due to underlying weak retail broadband subscriber growth

EBITDA did grow strongly, although this was in part due to less subscriber growth. The new pricing plans will likely drive more short term revenue weakness, but could potentially drive lower churn in the medium term, and they have renewed TalkTalk’s price competitiveness, particularly on high speed products

Longer term, we still think that the company will find it challenging to stabilise its retail broadband base in the face of a slowing market and Virgin Media’s network extension, at least without significantly upping its marketing spend and sacrificing some margin