Market revenue growth of 2% in Q3 was slightly lower than the previous quarter, but remained firmly positive at least.
The dual impacts of slowing broadband volume growth and consumer price sensitivity will likely hit volumes and ARPU even harder over the tough winter to come.
Inflation-linked price increases will give some operators a boost next year, but their very high levels (c.15%) will be hard to manage during a cost-of-living squeeze.
Vodafone’s downgraded guidance is due to its woes in Germany rather than the economy. There is some limited reassurance that this will turnaround soon.
It remains challenging for Vodafone to achieve its revised FY guidance with a 7ppt improvement in underlying EBITDA growth required to get there.
Leverage and cash-calls are much improved, and the dividend looks assured, but the Vantage and German deals mean escalating pressures on EBITDA.
With the cost-of-living crisis expected to worsen over the coming months, the telecoms operators must walk a fine line—support customers but protect their financial performance in the face of a likely recession and rising costs.
We are likely to see weakness on the B2B side and consumers will look for ways to reduce out-of-bundle spend, seek retention discounts and spin down to lower speed tiers and data bundles, but we expect that dropping services completely will hold limited appeal.
Proactive retention activity and promotional pricing is likely to pay off more than slashing headline prices, and will help to avoid a damaging price war—a far bigger risk to their revenues than spin-down.
On 12 May 2022, Enders Analysis co-hosted the annual Media and Telecoms 2022 & Beyond conference with Deloitte, sponsored by Barclays, Financial Times, Meta, and Deloitte Legal
With up to 500 attendees and over 40 speakers from the TMT sectors, including leading executives, policy leaders, and industry experts, the conference focused on regulation, infrastructure, and how new technologies will impact the future of the sector
These are edited transcripts of Sessions 7 and 8 covering: UK mobile and the opportunities and challenges of infrastructure. Videos of the presentations are also available on the conference website
On 12 May 2022, Enders Analysis co-hosted the annual Media and Telecoms 2022 & Beyond conference with Deloitte, sponsored by Barclays, Financial Times, Meta, and Deloitte Legal
With up to 500 attendees and over 40 speakers from the TMT sectors, including leading executives, policy leaders, and industry experts, the conference focused on regulation, infrastructure, and how new technologies will impact the future of the sector
These are edited transcripts of Sessions 4-6 covering: European media, sustainability in the TMT sector, and advertising mega-trends. Videos of the presentations are also available on the conference website
Vodafone attributed its muted outlook for the coming year to macroeconomic headwinds but it has more to do with the German cable business, which is now in decline rather than being the growth engine that it was billed to be when acquired.
Value-accretive deals remain on the agenda but management are rightly reluctant to appear desperate—a difficult balancing act with the risk of missing out on further opportunities.
Substantial fibre investment in Germany looks inevitable, as does sustained competitive pressure there. Even if the former is off balance sheet, the combination will dampen hopes of growth and a progressive dividend.
The EU’s GDPR enforcers have ruled that IAB Europe’s framework for collecting user consent, a standard used by about 80% of sites on the continent, is in violation of the regulations
This is one of the clearest signs yet that regulation is starting to catch up with Apple and Google’s privacy push, as support for cookies and mobile ad IDs is due to end over the next few years
Publishers must prepare now by treating privacy as a core part of user experience and adopting a reader-first revenue model that also supports advertising in a trusted environment
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.
ITV is combining its three domestic digital services—ITV Hub, Hub+ and BritBox—into a single product, ITVX, which will have a free and paid tier and see the addition of FAST channels. It will launch in Q4
The Hub and BritBox UK have underwhelmed in their respective markets, hampered by the broadcaster favouring linear revenues and the competitiveness posed by the surfeit of free British content. ITV is looking to change this direction, with shifts in content windowing and some additional content spend
Total external revenues were up 24% YoY in 2021 (and up 4% on 2019) to £3,450 million, driven by the highest advertising revenue on record, however Studios has not yet returned to pre-COVID levels, with both revenues (£1,760 million) and margin (12%) still down on 2019 (£1,830 million and 15%, respectively)
Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.
The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.
In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.