UK mobile service revenue growth dipped down in Q4, but at least remained still just positive at 0.3%. The dip was driven by contract ARPU weakness at the largest three operators, mitigated by strong ARPU growth at the smallest operator H3G

Looking forward, the sources of weakness (growth of SIM-only and tariff policy adjustments) look more temporary than the sources of growth (data volume growth filling up capacity). SIM-only is likely to hit a natural ceiling, whereas data volume growth has no ceiling in sight and the scope for network capacity expansion is limited

With CK Hutchison currently negotiating with the European Commission in regards to the fate of the H3G and O2 merger, there is a high level of uncertainty on the future of the structure of the UK mobile market. Merging the two networks would generate extra capacity and capability, likely increasing competitive intensity, but the precise form this would take is unclear, as is the future of the brands and the identity of the capacity MVNO recipient(s)

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

H3G and O2 are planning for their UK merger to create a mobile-only operator that leads the market in network quality and capacity, taking a contrary approach to the current trend of fixed/mobile convergent strategies

The merger would ease the severe spectral capacity constraints currently faced by both operators, and ease the scale disadvantage suffered by H3G ever since its launch in 2003, allowing a much stronger long term competitor

Post-merger, the UK mobile market will likely end up just as competitive as it is now, with pricing pressure actually more likely to continue into the medium term, and plenty of opportunities and threats for all the main players as the environment re-aligns

In 2014 Canal+’s core premium French pay-TV business has continued to lose subscribers and swallowed a VAT increase. But this was offset by growth in FTA ad sales, in ARPU, in overseas subscriptions and by acquisitions. EBITDA has continued the decline which commenced in 2013

Eleven years ago Canal+ in France and Sky in Britain had the same household penetration, but since then a gap has opened up and now Canal+ lags behind at 21% compared to Sky’s 34%. The French platform suffers from its regulated focus on films and its neglect of hardware

A deep revision of Canal+’s model is needed, through building a library of scripted series and a revamp of the consumer proposition to differentiate on quality and user experience. Building on recent initiatives, mediocre IPTV services should be bypassed by OTT bundles on fibre, and the satellite offering upgraded

UK mobile service revenue growth stayed positive in Q3 2014, albeit at a slightly lower level than last quarter, an achievement given performance in recent years, but a slight disappointment given the previous improving trend. Pricing trends were a little worrying, but data volumes continue to accelerate markedly

With Phones 4U ceasing to trade towards the end of the quarter, Q4’s subscriber shares will be largely determined by where its prior customers end up. With these representing 13% of market gross adds which implies 65% of net adds, the impact is significant

Merger talks underway with the parents of O2/EE and BT, with H3G reportedly getting involved, will have an impact whether they lead to a deal or not; if either EE or O2 (or both) remain independent within the UK, they will likely need reinvigorating and re-motivating as to their raison d’etre or risk drifting without a clear direction

European mobile service revenue growth improved by 0.5ppts to -7.2% in Q2 2014, but all of this and more was driven by a reduced regulatory impact; underlying growth has been stuck at around 6% for the last four quarters, with progress in some areas consistently being countered by further pricing pressure

Industry consolidation has progressed to some extent, but would have had little impact in the quarter. Further in-country mobile/mobile mergers are more than likely but uncertainty driven by the changing European Commission may be delaying decisions to move forward

The UK example shows that consolidation is not necessary for market repair, but in the present environment the smaller operators in continental Europe have every incentive to be as disruptive as possible to encourage their acquisition, so further mergers cannot come soon enough

UK mobile service revenue growth finally returned to positive territory in Q2 2014 after three years of decline, largely driven by the MTR impact dropping out, but also helped by a 0.6ppt improvement in underlying growth

Data volumes accelerated markedly during the quarter, with 4G and improved 3G speeds encouraging more video/media activity, which is far more bandwidth intensive (as well as having less of a substitution effect) than text communications activity. As consumers move to higher data bundles, smartphone usage may actually start to enhance ARPU through tariff upgrades as opposed to damage ARPUs through lower out-of-bundle voice and text usage

The outlook remains positive, with headline pricing stable, contract ARPUs stabilising and the competitive environment relatively benign

UK mobile service revenue growth remained relatively healthy at -1.6% in Q1 2014, despite the absence of some favourable one-off factors in the previous quarter, consolidating the improvements seen in 2013. Underlying growth improved a touch to 0.3%, and given that the regulatory impact will drop out next quarter, reported revenue growth may well turn positive in Q2

Service revenue growth among the ‘big three’ has re-converged to around -3% to -4%, with Vodafone improving due to strong recent subscriber gains, and EE worsening slightly after a strong previous quarter. H3G’s growth worsened due to the previous quarter including some one-off benefits, but it remains very strong at 10%, with contract ARPU having stabilised

We expect the market environment to continue to be relatively benign, with the biggest disruptive threats Vodafone, which is currently competing on quality but may become more aggressive on price if it loses patience, and the fixed line operator MVNOs, who have significant distribution disadvantages but nonetheless can harm the market with discounted pricing

As we expected, Canal+ won the broadcast rights to the Ligue 1 top three weekly games in 2016-20 and beIN Sports have the seven remaining fixtures Sensibly, the two competitors avoided a bidding war but ended up paying 28% more than the 2012-16 agreement – the first substantial increase since 2005 The new contract will help Canal+ sustain pricing and marketing. Meanwhile, even if it completely lost the ongoing Champions’ League auction, Canal+’s football prominence would remain

European mobile service revenue growth again disappointed in Q4, dropping slightly from -8.9% to -9.1%, with underlying revenue growth dropping a little further from -6.0% to -6.3%, again reaching a record low

There had been hopes that improved GDP growth would drive a volume rebound, that price declines would start to annualise out, and that declining out-of-bundle usage would wane in its impact as this usage declined. In the event, ongoing price competition from smaller operators, MVNOs and quad play offerings, combined with surging use of OTT communications platforms, have dominated trends

In the medium term, the development of 4G and Vodafone’s Project Spring may bring some much needed network differentiation back to the market, allowing pricing power to return to the larger operators. However, it will be 2015-2016 before these factors come into play: in the short term, the main source of optimism is consolidation