Fujitsu UK’s announcement of plans to provide wholesale fibre-to-the-premise (FTTP) to five million premises potentially poses a significant threat to BT
However, deployment is contingent on the project attracting at least 60% of the available state funding and significant improvement by Openreach of its terms for Physical Infrastructure Access (PIA)
In addition, ISPs using Fujitsu’s network may find it difficult to attract retail market share from BT based on a high speed broadband proposition. However, should Fujitsu deploy at scale, the project could prove positive for Virgin Media
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Some of Ofcom’s proposed wholesale charge controls for Openreach fixed access services sound stringent
However, we estimate that the overall financial impact on BT and other players is likely to be very small
We do not expect the proposals to result in changes to many retail prices, but they should tilt the playing field slightly in favour of BT Retail’s competitors, particularly smaller providers of broadband and business services
European regulators are struggling to find the right balance between promoting the competitive impact of local loop unbundling (LLU) and encouraging investment in next generation access networks by incumbents and others
In continental Europe, regulators have tended to focus on the provision by incumbents to competing providers of access to physical infrastructure. This affords competing providers a high degree of product differentiation, but tends to be relatively uneconomic, to the detriment of unbundlers in markets where the cable operator is strong
In the UK, the regulator has tended to focus on the provision by BT Openreach of bitstream access at a price set by the market
European mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative
While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France
The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months
In this short presentation we show our analysis of trends in UK broadband and telephony to December 2010, based on the published results of the major service providers. We include our own estimates where reported data is incomplete. This quarter’s edition includes a look at Ofcom’s recent research into broadband speeds and its response to the Advertising Standards Authority’s review of broadband advertising.
TalkTalk Group (TTG) lost broadband customers for the first time in its history in the quarter to December due to dissatisfaction among former Tiscali customers, and to a lesser extent, at AOL UK
But gross additions appeared to remain healthy and ARPU growth was strong, holding group revenue flat
The group remains on track to make guidance for the financial year to March. Beyond that, we remain optimistic about the prospects for further cost reduction, but reducing churn remains a daunting prospect
In this short presentation we show our analysis of trends in UK broadband and telephony to September 2010, based on the published results of the major service providers and Ofcom telephony data. We include our own estimates where reported data is incomplete. This quarter’s edition includes a revision to some historical trends resulting from our own interpretation of BT’s recent adjustment to the volume of unbundled lines.
Highlights in the quarter included exceptionally strong growth in broadband net additions at Sky and the resumption of the long term rate of decline in broadband market growth by volume.
European mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally
GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern
Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero
TalkTalk Group (TTG) revenue growth for the six months to September was flat on a like-for-like basis; broadband net additions were affected by heavy churn among former Tiscali customers as the migration process got under way
Guidance for broadband net adds to March has been reduced by two thirds, but the prospect of improved efficiency from migrations and strong ARPU growth has enabled financial guidance for the full year to be maintained
Management has laid out ambitious plans to improve performance further by cutting costs. The plans look feasible, but controlling churn will be a long haul
VMed’s Q3 results showed continuing strength in the face of heavy marketing by BT Retail and BSkyB, although cable churn increased significantly
There are plenty of further challenges on the horizon, including a downturn in consumer confidence and later, the launch of YouView and wider deployment by BT of next generation access
The broad based nature of the company’s growth and its plans for further product development in TV and broadband continue to give us confidence in the potential for further growth in cash flow, albeit at a more modest pace