National newspaper advertising revenues should be up 6-8% year-on-year in 2010, with ‘popular’ titles in particular attracting display ads from national retailer brands

Local and regional press advertising revenues will fall by about 6% year-on-year, mainly on the continued decline of recruitment classifieds

Publishers are exploring more efficient printing, new digital models, and staking a claim on e-commerce

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

Microsoft’s new Windows Phone 7 operating system is launching with a big bang: ten handsets, eighteen operators, and a massive marketing campaign

The OS itself is positioned firmly in between iPhone and Android in terms of ease-of-use and customisability; it is as fast as the best-in-class but no faster; and its interface is bold but will not be to everybody’s taste

A lack of apps, limited distribution, and expensive handsets will likely limit sales in the short term. Longer term, being late in the game with no truly compelling unique feature will make building a major position very challenging, but not impossible

The decline in UK residential broadband market growth has paused due to accelerating adoption by older householders and increased household formation. We expect 970,000 net additions in 2010 and 20.5 million broadband households by 2015. However we expect growth will continue to decline from 2011 as the impact of the government spending review feeds into consumer confidence and the market becomes increasingly saturated

As BT’s next generation access network is deployed, there is likely to be accelerated improvement in DSL price/performance, with DSL customers migrating to a 40 Mbit/s headline speed as it becomes available. The impact of this is likely to be compounded by Virgin Media up-rating its broadband portfolio from speeds of 10, 20 and 50 Mbit/s to 20, 50 and 100 Mbit/s

In the absence of further consolidation, in market share terms the industry appears set to remain divided into three strategic segments: the ‘big three’, brand extenders, and Sky. We expect residential broadband market revenue (excluding content) to continue to decline gradually, stabilising by 2015 as the impact of market share gain by lower priced ISPs attenuates due to a combination of a maturing market and reduced price differentials caused by NGA

Everything Everywhere’s maiden investor day presentation was soured by the disappointing results it reported for Q2 2010, with service revenue growth underperforming its UK competitors by 7 percentage points. At current relative growth rates, O2 will retake its lead by June 2011

The synergy savings targets have been maintained, but focused more towards back office functions and away from front line assets such as shops and network base station sites, with the brands being kept separate for the time being. This is a sensible enough approach, and the cost savings still look eminently achievable

Going forward, the company will have the advantage of a better network but the disadvantage of disruptive integration for the next few years. Its main challenge will be to reverse the current negative revenue momentum, which puts both its revenue and margin targets at risk

There were approximately 19 million fixed broadband lines in the UK at the end of June 2010 including those used by small and medium enterprises (SMEs)

Year-on-year subscriber growth in Q2 increased by half a percentage point, following stabilisation in Q1, the first material since the early years of UK broadband

Looking at net additions in the quarter, Q2 saw a sequential drop of 23%, the lowest Q1 to Q2 sequential decline since 2005 . Year-on-year growth in net adds, at 51%, continued to accelerate rapidly

UK reported mobile subscriber growth has returned to stronger growth over the past few quarters as the UK economy slowly recovers

O2 is still the leading operator in terms of both its own customer loyalty and share of other operators’ customers who intend to switch, though its lead has narrowed considerably on last year

UK handset sales are likely to continue to rise, with intention to replace in the next 12 months rising from 32% in 2009 to 35% in 2010, which is albeit still some way short of the 40% pre-recession figure

Data usage overall is up –the proportion of consumers regularly browsing news and information increased to 22% from 16% last year. However, this increase was not uniform; 5ppts of this was the direct result of there being more iPhones and BlackBerrys in use, and only 1ppt was due to increased usage on any other handset

There were approximately 18.7 million fixed broadband lines in the UK at the end of March 2010 including those used by small and medium enterprises (SMEs)

Year-on-year subscriber growth in Q1 increased for the first time since the early years of the industry, although the increase, from 5.7% to 5.9% was very slight. In our view it should be interpreted as a stabilisation

Looking at net additions in the quarter, Q1 saw the sequential growth drop back to a more normal level of 9% after the 54% spike in the previous quarter, but year-on-year growth, at 21%, was the first really substantial increase since Q3 2005, when market growth was coming to the end of its exponential phase

There were approximately 18.4 million fixed broadband lines in the UK at the end of Q4 2009 including those used by small and medium enterprises (SMEs)

Subscriber growth over the past year has continued to drop but the rate of decline has slowed to the lowest ever. Year-on-year subscriber growth in Q4 was 5.7%, only slightly down on Q3

Looking at net additions, Q4 saw the strongest sequential growth in percentage terms since the early days of UK broadband, with growth of 54% compared to 10% in Q4 2008. The leap in Q4 2009 was from a relatively low base, but even in absolute terms, the sequential increase in net adds of 111k was the highest since Q3 2004