The CMA's provisional findings on the Vodafone/Three merger reiterate its concerns around the impact on the retail and wholesale market but its previous issues regarding mobile towers sharing with BT/EE have been satisfied 

Crucially, the CMA seems somewhat dismissive of structural remedies, although hasn't ruled them out entirely. Remedies sought in the form of network and pricing commitments seem somewhat unnecessary, but nonetheless workable 

We now expect the Vodafone Three merger to gain approval in December, with remedy detail negotiated over the coming months—a very significant positive development for the sector 

CityFibre has announced a deal to supply the second largest UK ISP Sky with wholesale broadband services, doubling its addressable target market at a stroke, in a blow to Openreach.

This may be just a foot in the door for CityFibre, but it is a critical one, and puts it firmly in the driving seat for altnet consolidation. There are also positives for VMO2 and other altnets hopeful of an eventual wholesale deal with Sky, and for retail ISPs now that the altnet sector is pitching towards wholesale away from retail.

While this is obviously bad news for Openreach, we see it more as an absence of a potential positive than something that might actually worsen current trends, and there are mitigating positives for the wider BT Group.

Market revenue growth was just positive at 0.2% in Q2, as lower price increases were mitigated by some temporary ARPU gains.

Growth is likely to drop negative in the rest of year however, with continued weak volume growth compounded by temporary ARPU gains unwinding.

Pricing structures differ quite widely as regards landline offers and out-of-contract pricing, and all could benefit from adopting best practice, a marginal gain worth pursuing in a tough market.
 

VMO2 survived the hammer blow of lower inflation-linked mobile price increases in Q2 with substantially unchanged revenue and EBITDA growth, helped by improving broadband ARPU

However, both mobile contract and broadband subs suffered declines, likely driven by issues with serving existing customers as well as attracting new ones, and these trends have to improve for the company to return to top and bottom line growth

Guidance implies that EBITDA growth will worsen in H2, but this would be good news in our view if it is driven by expenditure to support improved subscriber growth across broadband and mobile 

BT’s revenue growth in Q1 was hit by lower price increases, but positive EBITDA growth was achieved thanks to strong cost control as inflationary pressures abate.

Subscriber figures were decidedly mixed, with mobile much improved, retail broadband much the same in a difficult market, and Openreach broadband much worse (but still manageable in context).

The bigger picture is that BT is successfully keeping all metrics roughly stable as it completes its fibre roll-out and waits for the inevitable cashflow turnaround as a result.

After an arduous ten-month process, France’s Ligue 1 has reached a tentative deal to license its 2024-29 broadcasting rights at a price 14% down on the previous cycle.

Adding France (for €400 million p.a.), DAZN now has prominent positions in four out of the five big European markets. With a weekly top pick (for €100m p.a.), beIN consolidates its model.

Attention turns to distribution, and whether DAZN will patch up its partnership with Canal+.

Vodafone/H3G/VMO2 have announced a spectrum-trading and towers-sharing deal, allaying potential spectrum concerns around the proposed Vodafone/H3G merger, although BT may argue that it is short of some critical spectrum bands.

The towers sharing agreement incorporates H3G spectrum into the VMO2/Vodafone Beacon agreement and appears to expand the agreement onto some of H3G's current sites.

We estimate a c.70% increase in VMO2 capacity from this deal and 5% for the industry as a whole (in addition to the 25% from the Vodafone/Three merger). BT/EE made a strong argument for spectrum reallocation in its merger objection, and some validity to that argument may or may not remain post-trade

On 4 June 2024, Enders Analysis co-hosted the annual Media and Telecoms 2024 & Beyond Conference with Deloitte, sponsored by Barclays, Financial Times, Salesforce and Adobe. 

With over 580 attendees and over 40 speakers from the TMT sector, including leading executives, policy leaders, and industry experts, the conference focused on how new technologies, regulation and infrastructure will impact the future of the industry. 

This is the edited transcript of Session Three, covering: consolidation in the telecoms sector; fixed-mobile convergence; and the future of the fibre industry. Videos of the presentations are available on the conference website.

On 4 June 2024, Enders Analysis co-hosted the annual Media and Telecoms 2024 & Beyond Conference with Deloitte, sponsored by Barclays, Salesforce, the Financial Times, and Adobe.

With over 580 attendees and over 40 speakers from the TMT sector, including leading executives and industry experts, the conference focused on how new technologies, regulation and infrastructure will impact the future of the industry.

This is the edited transcript of Session One, covering: the evolution of streaming models, and public service broadcasting in the digital age. Videos of the presentations will be available on the conference website.

Market revenue growth was maintained at 1.6% in Q4, helped by strong underlying ARPU, mitigated by weak volume growth.

Lower price rises will likely slow market revenue growth by c.1-2ppts next quarter, with BT being slowed the most at c.5ppts.

The market is being hit by lacklustre demand, growing altnets and persistent price competition, with these factors likely to persist in the short term.