UK residential communications market revenue growth dipped down 2ppts to 4% in Q1 2016, due in roughly equal measure to slowing broadband growth, some one-off benefits in the previous quarter dropping out, and generally weak ARPU likely caused by promotional introductory price discounting

Virgin Media was the only major operator to buck the market trend and accelerate broadband growth, helped by its network extension Project Lightning, and this impact will grow throughout 2016, with the remaining operators squeezed between this and the slowing market

Growth in the rest of the year will be impacted by pricing decisions yet to be made, and slowing volumes could well drive market revenue growth below 4% during the year, but we do not expect it to drop very much below this

TalkTalk Q4 2015/16 results firmly indicated that operations had moved on from the cyber-attack; record low churn and strong mobile (+90k) and fibre (+72k) traction with stable gross adds were all in line with the revised strategy announced last quarter and marked the best net adds performance for the year

Wholesale subscriber net adds (+49k) were critical to on-net base stability against retail net losses (-49k), highlighting the short term value of wholesaling as a hedge against heightened (and expensive) retail competition although long term sustainability will rely on traction in retail

FY17 guidance targets EBITDA of £320-360m, with an implied 17-20% margin (+3-6ppts on FY16), which is accessible from MTTS projections, lost costs from revised trading plans, and lower CPAs before counting revenue growth contributions. The operating cost impact from blinkbox, York fibre and other new cost structures appears benign for the moment

A post-Brexit recession will cause a hyper-cyclical decline in the advertising revenues of broadcasters and publishers

The Vote Leave idea of the UK joining a free trade area for goods with the EU would sever UK access to the Single Market for services, damaging the export-reliant audiovisual group, among many other sectors of strength

Made-in-the-UK IT, software and computer consultancy services will lose eligibility for government procurement tenders once the UK is an outsider to the EU

Enders Analysis co-hosted its annual conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 8 March 2016. The event featured talks from 22 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette.

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

Videos of the presentations are available on the conference website.

The UK residential communications market maintained strong growth of 6% in Q4, helped by overlapping price increases at BT and TalkTalk, albeit mitigated by weaker volume growth as a result of the TalkTalk cyber-attack

This strong growth level benefits from multiple factors, including continually growing broadband adoption, broadband ARPU being boosted by the shift to superfast, price increases across line rental, calls and premium pay TV, and additional pay TV adoption at the lower end

We expect a modest dip in market revenue growth moving into 2016 as various one-off boosts drop out, but the underlying drivers of growth are sufficiently diversified to give us confidence that further downside is limited

Ofcom is encouraging competitive investment in local access networks using BT’s ducts and poles; in our view this is very unlikely to happen on a large scale, due to both the lack of spare capacity in existing plant and the generally poor prospective economics of a third local access network in the UK

Ofcom’s favoured model for Openreach is an enhanced version of the current structural separation model, and this is most likely to be reached via a negotiated settlement with BT; this and a number of other proposed measures, if implemented, will increase Openreach’s costs, and these costs will be re-charged to both BT’s retail division and its DSL competitors

Ofcom remains keen to retain four mobile network operators, in spite of clear evidence that at most three are viable at current retail price levels, and it is keen to implement a number of interventionist consumer protection measures that suggest it is keen on competition in theory, but not so much in practice

Damage from the cyber-attack was revealed to be a 2% impact to the on-net subscriber growth, a 3% impact to Group revenue growth and a combined EBITDA and exceptionals cost impact of £75-80m, roughly double the previous guidance

An updated FY17 trading strategy promises “more conservative” price increases and greater focus on upselling mobile/fibre/TV to existing customers, while maintaining rather than growing the consumer base

FY17 guidance has been updated to account for cyber-attack related setbacks and trading strategy adjustments, now aiming for modest revenue growth and EBITDA of £320-360m and an implied margin of 17-20%

The UK residential communications sector again had a strong quarter for revenue growth, with reported growth from the top four operators at 5%, or around 4% excluding the one-off impact of extra BT Sport related revenues

Unfortunately cost growth was even stronger, with margins dropping at three of the four largest operators. The aggressive launch of BT Sport has driven up content costs, marketing costs or both for all of the operators

The main issue going forward will continue to be actual and potential disruption relating to BT Sport. Content and marketing costs have likely been set at a new higher level, with further increases possible up to and following mid-2015, when the next Premier League auction is due and BT takes over the Champions League rights

TalkTalk maintained recent momentum despite increased competition in the quarter, delivering 5k broadband net adds and 167k pay TV net adds, although increased churn required higher marketing spend to achieve this

TalkTalk restructured its pricing towards the end of the quarter, increasing certain prices, introducing a lower cost broadband option and bringing pay TV to its (now) mid-tier plan; the net impact appears as if it will be positive

TalkTalk is fairly well insulated from the ongoing BT/Sky battle, with little enthusiasm for sports content within its base, and pricing that is already very competitive, but extra marketing costs may still weigh going forward

UK residential communications revenue growth was again strong in Q2 2013 at 4% supported by strong unit volume growth (despite seasonal factors in the quarter) and firming ARPU, helped by firm pricing and high speed broadband take up

High speed broadband adoption continued apace at BT and Virgin Media, but much more slowly at the other operators. This may start to change in the second half of the year, as Sky and TalkTalk market the product more aggressively, and a wires-only self-install version becomes available

Overall the market outlook remains very healthy, with two potential areas of market disruption – BT Sport and regulated pricing – looking like they will resolve without prompting a damaging price war