Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides the accompanying slides for some of the presentations.

Videos of the presentations are available on the conference website.

Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts from some of the talks, and you will find accompanying slides for many of the presentations here.

Videos of the presentations are available on the conference website.

The UK residential communications sector continues to be in rude health, with revenue growth in Q4 accelerating by 1ppt to 5.7%, the strongest it has been for years, with all of the operators enjoying an improvement. Volumes were strong, and ARPU even stronger, with the latter driving most of the revenue growth progress, driven by firm pricing and high speed broadband adoption

Growing revenues and profits in an industry tends to encourage both investment and competition, and this is certainly the case in the fixed telecoms market, as BT announced plans for higher speed services using G.fast and Virgin Media announced a 4 million premises network expansion. The timings suggest that Virgin Media will keep its edge; given historic trends and its network capabilities we expect it to be offering superior speeds to G.fast by the time G.fast hits the mass market

In competitive terms the biggest short term threat is EE, which is growing its broadband base at 15%, and may accelerate further in 2015. Its success appear to stem not so much from the raw appeal of ‘quad play’ bundling as improved performance in the mechanics of cross-selling from physical shops. EE itself may be less of a threat if its planned merger with BT is completed, but Vodafone is launching broadband services in the spring, and H3G/O2 may yet be encouraged into the market

TalkTalk’s revenue growth accelerated to over 4% in Q3, despite a tough comparative, with a price increase towards the end of the quarter and robust corporate revenue growth helping, giving it good momentum into 2015

Broadband net adds of 15k were unchanged on the previous quarter, disappointing given a broader market bounce, but the company expects acceleration next quarter

The company warned of lower than expected EBITDA margin in H2 2014/15, making its medium term 25% target look more challenging, but margins are still likely to improve going forward

2014 has been a good year for total advertising, which we forecast to grow by 5.5% across the year; display advertising spend is also forecast to grow by over 6% year-on-year. This is largely thanks to a positive economic backdrop, where we have seen a significant rise in consumer expenditure over the last two years

Online advertising spend has been the biggest recipient of growing ad spend, with 20+% growth last year, this year and next. This has mostly been to the detriment of print revenues, where online classified search solutions, amongst other factors like declining circulation, have disrupted print marketplaces

Video has been the largest growth area in internet advertising as online video consumption increases. Up to now online spend has largely been accretive to TV budgets but we are starting to see some advertisers switch to online video spend. However we do not expect TV to suffer in the same way as press

Market revenue growth in the UK residential communications sector dipped down to 4.5% in Q3, from 5.4% in the previous quarter, but underlying revenue growth actually rose a touch by our estimates. In an intensely competitive quarter, BT lost ground relatively in broadband, with its net adds dropping compared to growth at the others, but BT still had the highest net adds in absolute terms, and continued to lead the way in revenue growth

With BT’s mooted bid for a mobile operator and quad play moves being highlighted by several operators, in this report we re-examine the evidence for consumer demand for quad play and find it still wanting. In the UK since 2001 there have been eight attempts at cross-selling between fixed and mobile, with five outright failures (three of which were from BT), two attempts that lost market share after an acquisition but are now growing modestly, and one attempt which has successfully gained modest share

The UK fixed business has better growth and far better margins than the mobile business. BT alone makes more cashflow in the UK than the entire mobile industry put together – the grass may always seem greener on the other side, but in this case it definitely is greener in fixed. The fixed operators have far more to lose than to gain, and for this reason alone they should perhaps be wary in their approach to quad play

TalkTalk had a solid quarter for net adds, helped by churn being held well under control, with broadband perking up, TV dipping down as pre-warned, and fibre and mobile both significantly accelerating

Revenue and ARPU growth accelerated, although not by as much as might have been expected given the timing of price rises, with the lower priced SimplyBroadband product likely still driving significant ARPU dilution

The company disappointed the financial markets with a warning of higher SACs in H2, and its medium term EBITDA margin target remains challenging, but continued revenue growth and margin expansion are nonetheless likely

UK consumers have embraced data-hungry services like Facebook and Google, but many also have concerns about privacy online; young people have a more positive view of the trade-off and know how to avoid targeted advertising

Businesses that are conscientious about consumers’ data gain their trust, and the gap between trusted brands and the market as a whole may grow substantially in the future

Despite Edward Snowden’s revelations on ‘Big brother snooping’, the UK Government has secured vast access to communications data without serious challenge to date

Market revenue growth in the UK residential communications sector continued to be robust in Q2 2014 at 5.4%, a slight increase on the previous quarter, with continued volume growth and firm pricing countering weak call volumes and the negative impact of a VAT legislation change hitting Virgin Media and TalkTalk

BT was the fastest growing out of the ‘big four’ in revenue terms in Q2 even after the direct revenue impact of BT Sport is excluded, a remarkable turnaround after being in last place a year ago, driven by both volume and ARPU growth continuing to accelerate, with fibre helping both

Since the end of Q2, promotional activity has already intensified, particularly from BT and Sky around the start of the new football season, and churn is likely to be under more pressure at all of the operators, although the disruption is likely to be less severe than that experienced around the launch of BT Sport last year, and we expect all of the major players to continue to grow in net terms

TalkTalk’s June quarter results revealed solid subscriber trends, with broadband, fibre, line rental and TV net adds all either matching or slightly improving upon the previous quarter

Revenue growth dipped down on the previous quarter (3% vs. 5%), but the price increases in May/June have yet to have a full quarter’s effect, and the company remains confident in its full year guidance of at least 4%

Churn dropped again on the previous quarter, and the company makes a strong case that its triple play strategy should reduce it further, but the big test will be whether it can continue the trend over the rest of the financial year