The UK continues to lead the EU5 in take-up and consumption of video-on-demand services, with close cultural alignment and a historic williness to pay for TV content making it a receptive home for US SVODs

Netflix dominates in most markets, benefiting from high-profile US imports and big-budget local productions. Local SVODs are struggling, with those operated by FTA broadcasters facing considerable challenges

Collaboration between local broadcasters and pay-TV platforms is essential if they are to hold at bay the threat of Netflix and co., with an increasingly favourable regulatory environment opening the door for unprecedented collaboration

For much of the online media industry, GDPR compliance has stalled at basic data audits and box ticking, as firms wait for the rest of the privacy regime to emerge

But weighing technicalities of legitimate interest and consent misses the point: transparent consumer value will be the only sustainable basis for processing personal data

The scrutiny of Google and Facebook privacy practices involves an added antitrust dimension, potentially leading to processing limits as remedies

European mobile service revenue growth was unchanged this quarter at 0.3% growth, despite an easing of the European roaming cuts impact. This was due to intensified pricing competition in Italy and Spain, and EE’s unexpected poor performance in the UK. France and Germany were the only countries to improve their growth, but the improvement in France was largely due to a revenue-boosting VAT loophole

More-for-more price increases continued during the quarter, but their implementation is increasingly dependent on market conditions. Zero-rated streaming offers have continued to launch, but remain the exception rather than the rule.  Given the long implementation periods required for innovative new products at most operators, this may be temporary

Looking forward, overall the outlook looks finely balanced with boosts from the reduced MTR impact in Germany in Q1 2018, an easing in Spain’s retail pricing pressure and EU roaming impact annualising out by Q3 2018. This is countered by France closing its VAT loophole, steep MTR impact in Spain in Q1 2018 and continuing intense competition in Italy given Iliad’s impending launch

UK residential communications market revenue growth fell again to 1.2%, with weakening ARPU growth the main driver. New customer pricing remains flat to down, and existing customers are being increasingly discounted, fuelling the ARPU weakness

High speed broadband adoption is proceeding apace, but the high speed premium is fairly thin, muting the impact on ARPU. Regulated wholesale price cuts from Openreach finalised today and due in April 2018 will not help

Looking forward, the March quarter will benefit from price timing effects at BT and Virgin Media, but we fear that the rest of 2018 will follow the current downward trend and the operators will need to adjust to an ex-growth environment

TalkTalk’s subscriber growth picked up a little in the quarter, but ARPU growth turned back negative, leaving consumer revenue still declining despite the heroic efforts it has made to turn around its subscriber growth in a slowing market

It is expecting even stronger subscriber growth next quarter, but it may need this to maintain ‘headline’ revenue growth given falling ARPU, and the high marketing costs required to achieve this have driven a reduction in EBITDA guidance

The company’s FTTP plans are less dramatic than they first look, with only a £100 million investment commitment over five years. The economics of the build look very challenging, but TalkTalk is minimally exposed to these

European mobile market service revenue growth dropped again in Q3, by 1.9ppts to -6.2%. This was not helped by a substantial increase in the MTR impact, driven by a big cut in Italy, but underlying revenue growth still fell by 1.3ppts In stark contrast to Europe, the US mobile market continues to grow apace, with there being over 10ppts between the growth rates of the two regions. The most obvious difference between the markets is the very much higher levels of capex spent by the US incumbents, which drives their superior network quality and coverage, and hence price premia, and hence superior growth The European incumbents have not (yet) used their greater ability to spend on capex to increase the spending gap with smaller operators, with 4G launches (mostly) being low profile with low initial coverage (the UK being a notable exception to this). While this is an understandable approach given the prevailing macroeconomic conditions, it does mean that closing the growth gap with the US remains a distant prospect

After a host of TV-related announcements/launches last quarter, the main feature of the last three months has been price increase announcements, with all four of the large operators announcing a significant price increase(s) to take effect between December 2012 and February 2013

High speed net adds remained strong at BT, and grew dramatically at the other DSL operators, although the latter figure remained very low in absolute terms. In time we expect strong adoption by Sky and TTG subscribers, but it may take years rather than months for consumer expectations of what is a ‘standard’ broadband speed to change

TTG reported some encouraging but not market-changing early figures for its new TV product, and BT is expected to launch a product with extra linear channels within the next few months. We continue to believe that both companies’ products will struggle to win subscribers off Sky and Virgin Media, but that they may have appeal to a modestly sized group of consumers that are not currently pay TV customers

Keen to reposition itself as a media conglomerate, Vivendi is considering merging SFR with private equity-owned Numericable and its B2B sister Completel, while reducing its stake in the new entity to below 50%.

Sizeable savings would come from migrating SFR’s fixed line subscribers in urban areas from Orange’s copper network to Numericable’s coax and FTTB, and from eliminating Completel’s LLU network and Numericable’s marketing spend.

In the short term, execution would be challenging and require sizeable capex. In the longer run, coax is a much cheaper alternative to investing in FTTH. The merger would put pressure on the other two altnets, Iliad and Bouygues, to consider consolidation scenarios.

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.

In this report we show our analysis of the performance, key trends, competitive dynamics and factors impacting the UK broadband, telephony and pay-TV markets

The first part of the report focusses on market level performance and KPIs such as volume and revenue growth, net adds, pricing and ARPU, and market shares as well as our analysis of key developments in high speed broadband and pay-TV offerings

The second covers the individual results of the four largest ISPs (BT, Virgin Media, BSkyB and TalkTalk Group) in the context of the wider market developments