BT’s Q4 was mixed in the detail, with consumer broadband volumes weakening but FTTP roll-out and adoption surging, with performance at the Group level solid enough.

The April price increase has reportedly landed well, strongly supporting BT’s guidance for revenue and EBITDA growth in 2022/23 with no other improvements required.

The macroeconomic environment continues to weaken, affecting BT and its premium brands in a number of ways, but it appears to have enough room in its guidance to weather this storm.

Whilst we remain sceptical of the churn reduction benefits of fixed/mobile convergence, the pandemic and a more astute approach from the operators is enhancing the case for it in the UK.

Creating the impression of a giveaway whilst minimizing the effective discount is key, as is extracting any loyalty and cost benefits.

Even if well executed, any upsides are likely to be modest. Operators are right to keep discounts to a minimum and to avoid M&A premia predicated on fixed/mobile convergence synergies.

European mobile revenue growth was zero for the third successive quarter with better mobility but less roaming upside, some B2B weakness, and stronger competitive intensity in the Italian and Spanish markets

Q1 should evidence some similar trends but the impact of out-of-contract notifications will begin to emerge and roaming looks set to become a significant boost from Q2

Consolidation fever continues to dominate the headlines though this is set against a backdrop of considerable uncertainty regarding regulatory approval

Market revenue growth accelerated to just under 2% in Q4, with broadband growth holding up despite the ending of most pandemic restrictions.

Backbook pricing pressure should continue to retreat in 2022, and ultrafast speed premia should also bolster ARPU as FTTP roll-outs accelerate.

The price increases due in April will further support growth, with BT in particular to benefit, and all will have to be wary of customer backlash.

TikTok has reached a billion users worldwide just four years after its global launch, much quicker than social media rivals, though its ban in India is a drag on growth.

TikTok’s popularity with under-25s has contributed to a hollowing-out of Meta’s active userbase. During the pandemic, TikTok also expanded its reach among older demographics, cementing its position within the mainstream and posing a further threat to Meta. 

TikTok could earn twice as much revenue as Snap in 2022, making it the first app to break out of the mid-league in years, with a huge runway for growth backed up by ByteDance’s remarkable success in China. 

BT had a solid Q3, with some mixed results but key metrics all improving, and a (perhaps unsurprisingly) slow post-lockdown recovery the only negative.

The price increase in April should drive dramatic (for BT) revenue and EBITDA acceleration at Consumer, Openreach and BT as a whole, and easily cover pressures within BT’s own cost base.

Longer-term growth is dependent on FTTP performance, which continues to look promising with improving metrics across the board in the quarter, and no news is good news in terms of ISPs signing with competitor networks.

European mobile service revenue growth again improved, albeit marginally, with the quarter’s gain driven by declines easing further in what nevertheless remain the three weakest markets: France, Italy and Spain. Generally stabilising pricing environments were a key factor although ARPUs in these markets remain largely in decline, under continued pressure from strong out-of-bundle revenue declines

In a post-consolidation world, H3G/O2 in the UK and Yoigo in Spain will be the only mobile-only MNOs in the top five European mobile markets, effectively cementing a convergence based future. Consolidation trends might point to the prospect of greater price stabilisation but a fresh land grab for the converged market could derail this

Overall, in spite of healthy underlying data trends, we continue to see medium term growth recovery prospects capped at around 1% given precedent from both the UK, where a healthy economy, healthy pricing environment and strong data trends have failed to exceed this level, and Germany, where post-consolidation revenue growth has reverted to negative territory, both due to competition and consolidation

European mobile service revenue growth improved to the highest in over four years driven by improvements in the three slowest growing markets of late. Out-of-bundle revenues are still declining at a rate of over 10% but data revenue growth trends point to underlying strengths in the revenue profile. Looking at the longer term picture begs the question as to whether the quarter’s improvement can be repeated over the next 18 months, transforming the industry into one with extremely healthy revenue growth of 5%-10%; on balance we are not very optimistic

Two major in-mobile transactions are yet to be approved by the EC, namely H3G/O2 in the UK and an H3G/Wind JV in Italy. The recent precedent from Denmark is somewhat discouraging, although the Danish consolidation was unusual in some respects. Nonetheless comments from the new competition commissioner Margrethe Vestager suggest that regulatory caution towards 4-to-3 mergers is still high

Progress towards convergence is continuing with few operators in a post-consolidation world being either 100% fixed or 100% mobile. Convergence has to date been discount-led and damaging to market revenues, but post-consolidation, operator rhetoric has been reassuringly more focused on intentions for increased investment in both LTE mobile networks and high speed fixed networks

European mobile service revenue growth improved once more in Q1, rising 1.1ppts to -1.6%, continuing a trend of underlying growth improvement that started in Q3 2014. The improvement was mainly driven by easing declines in France and Italy but deteriorating performance in Spain meant that Europe-wide growth did not improve by as much as in the last two quarters

Pricing stabilisation appears again to be the main driver of recovery (in those countries that are recovering) with more rational pricing allowing operators to monetise rapid data usage growth. However, more price cut moves have been made in France since the end of the quarter, Italy remains an inherently unstable market and Spain again suffered this quarter from convergence discounts

As data usage continues to grow rapidly, customer concern for high quality data networks increases, which makes investment in superior 4G networks a clearer differentiator for operators to convey to customers. The UK market leads the EU5 in this regard, and has taken advantage through rationally priced tiered data plans, but this effect spreading to the rest of the EU5 is a source of optimism as 4G roll-outs continue across Europe

European mobile service revenue growth improved for a fourth consecutive quarter jumping 1.7ppts to -2.7%, the slowest rate of decline in over three years. Easing declines in France, Italy and Spain largely drove the improvement but a full recovery in these markets is still some way away given that all of their growth rates remain below -5%. The UK, and now Germany, are experiencing positive mobile service revenue growth although their improvements in the quarter were more modest

Three announced consolidation transactions have yet to be approved by the regulators although none of these deals are likely to offer much market repair, being either of the wrong kind of deal or being in markets that are growing. Consolidation targets remain in France, Italy and Spain which offer clearer routes to market recovery as seen in Germany where the consolidation of O2/E-Plus has already led to positive rhetoric on medium term market growth prospects

Network investment continues with 4G roll-outs at or over 70% population coverage in all markets and targets being accelerated, supporting long term optimism in the sector. Strong data traffic growth coupled with the growing importance of data to service revenue give a clear focus for operators on value-adding network quality investment, although the impact of pricing competition in some markets could weigh on the ability to capitalise on these trends in the medium term