In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request
Cable &Wireless Worldwide’s performance for the six months to September was weak but made to look worse by one-offs
Underlying performance continues to be hit by strong competition and loss of voice revenue, but the impact of this has been made worse by underinvestment in data centres and neglect of the wholesale and SME businesses
The outlook for the year to March 2012 is poor, in line with the June warning. Beyond that, further investment in hosting and related capabilities will be necessary, and we continue to expect modest growth
Vodafone Europe’s service revenue growth improved marginally in the September quarter, a very solid performance under tricky circumstances, helped by good competitive performances and judicious pricing measures
The combined Europe and group common function EBITDA margin was again held flat, despite continued smartphone adoption pushing up handset costs, with strong cost control again evident
Pricing, competitive, regulatory and cost trends are all going well; but macroeconomic trends are clearly not, and are likely to make an acceleration in the second half of the year very difficult
Openreach has announced large cuts in the prices of some important components of physical infrastructure access (PIA). A further substantial reduction in duct prices is possible as a result of an adjustment by Ofcom to Openreach’s regulatory asset value (RAV)
The reductions are helpful to the economics of bids by altnets such as Fujitsu for government funds to deploy rural next generation access (NGA), and to Virgin Media, as it expands its existing cable network footprint
However, the economics of NGA continue to strike us as challenging and we expect the impact of PIA on BT to be modest due to the remaining potential wholesale revenue, and BT Retail’s ability to use third party PIA-based networks
Nearly a year after rolling out Google TV in the US, Google has confirmed plans to launch its ‘smart TV’ operating platform in Europe and the UK by early 2012
To date, Google TV in the US has been a disappointment, with little broadcaster support and, until recently, expensive devices, resulting in low adoption
The content issue is likely to dog Google TV, both here and in other European markets; access to key broadcaster TV and video programming will be a major challenge
Advancing its free-to-air TV project, France’s Canal+ is to buy Bolloré TV’s national channels for €465 million to gain (scarce) licences for FTA terrestrial broadcast
Canal+ plans to leverage its library of original programming to attract upscale audiences, neglected by commercial rivals
However, the Vivendi investment case of a 9% return on capital is built on incompatible assumptions about profit margins and market share – to grow the latter in a mature market, a channel needs to sacrifice the former
Whilst UK GDP growth crawls along at a snail’s pace in 2011, (real) private consumption, its principal component, has been in sequential decline since Q4 2010, dragging consumer facing industries down
UK media are not equally affected. The internet continues to grow through search as well as display, but we expect TV NAR to be flat in 2011
Press advertising is worst affected by the downturn due to its exposure to retail advertising on top of the structural shift of classifieds to the internet
In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request
After strong underlying improvements in growth and profitability in 2010, in H1 2011 H3G Europe’s service revenue growth was steady at 3% and margins only slightly improved to (underlying) EBIT breakeven
In the UK, service revenue growth accelerated to 7% (from -1% in H2 2010), with EBIT maintained at about breakeven, as the UK company’s ongoing strong contract subscriber growth fed through
Italy suffered roughly the opposite fate, with service revenue growth falling to -8%, as its recent subscriber losses fed through, and EBIT remained firmly negative
ITV reported strong year-on-year growth in profits in H1 2011, enabling a substantial reduction of net debt and putting the company in a stronger position to invest in growth as it pursues its five year transformation plan
Important to longer term success, ITV Family share of viewing has held up, and ITV looks well placed to expand its market share of TV NAR (Net Advertising Revenue) over the next two years, albeit in an uncertain and challenging economic environment
Early signs of creative revival at ITV Studios are most encouraging, while online poses the toughest challenges, yet remains important because of the fundamental interactive synergies between online and broadcast television