At present, Sky exclusively holds all pay-TV domestic live rights to Germany’s top football league. The 2017-2021 rights auction will conclude in early June. It contains a new soft ‘no single buyer’ clause referring solely to online rights

Sky’s real threat comes from potential bids for the main TV packages by deep-pocketed telecom or digital platforms. This could see Sky losing games and shouldering significant cost increases

We think Sky’s German operations will break even by fiscal 2017. Beyond this, profitability is heavily dependent on the auction’s outcome. If it were to retain all live rights, Sky could afford to increase Bundesliga costs by up to 40% over the four-year period. Anything beyond this would lead to Sky making losses

European mobile service revenue growth was flat at -0.8%, while underlying country movements were somewhat more dramatic. The key highlights were Italy returning to positive growth driven by pricing stability, and France showing worsening growth decline for the first time in over two years impacted by challenger telco pricing cuts

An assessment of these challenger telcos highlights a somewhat precarious position, as continued price aggression yields diminishing incremental gains, and they all remain some way from gaining the scale to achieve profitability

The only incentive for challengers to remain aggressive is as an encouragement for their competitors to buy them; increasing regulatory hurdles to consolidation would remove even this incentive, leaving price increases as their only rational route to profitability

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)

Vodafone Europe’s service revenue growth continued its trend of gradual improvement, helped by solid contract net adds and sustained high data traffic growth, and is now almost stable

Project Spring network metrics performed strongly in the quarter, and there is some evidence of this translating into better operating performance in Italy, which enjoyed positive mobile service revenue growth for the first time since 2010

Problems remain for the company in its other key mobile markets however, all of which remain in decline. Although these issues may prove temporary, and Project Spring may yet offer them a boost, further pressure is on the horizon due to competitor consolidation and associated regulatory remedies

Vodafone’s revenue growth has improved, with core underlying growth rising both relative to the previous quarter and relative to its competitors

Vodafone UK’s new broadband product is not very competitively priced compared to the offers from Carphone Warehouse and Orange, costing £5-10 a month more than the nearest equivalent packages

In a fit of pique over increasing subsidies, Vodafone UK is dropping Carphone Warehouse (CPW) as a distributor, and moving exclusively to Phones4U with lower subsidy levels and volume guarantees, while Orange is reportedly also considering its position with CPW

The Carphone Warehouse (CPW)’s £370 million acquisition of AOL UK’s internet access business is set to quadruple the size of CPW’s UK broadband customer base, enabling it to become the third largest player in the market after NTL and BT, with approximately 2 million broadband subscribers

Vodafone is taking the first step in implementing its convergence strategy in the UK by buying broadband from BT Wholesale; while we believe the strategy is misguided, Vodafone’s approach is at least cautious 

The company is at least unlikely to be losing money on the product, and is perhaps just sensibly testing the water for positive consumer interest in a bundled package from Vodafone

We expect the water to be very cold - results from Orange, NTL and BT suggest continued very low consumer interest in fixed-mobile convergence, and we doubt that Vodafone will fare much better

Vodafone blamed a harsh competitive environment and the timing of Easter for its low revenue growth in core markets reported this week. Its growth did at least not decline again, although we expect that Vodafone will again prove to be underperforming its competitors as they report their figures over the coming weeks 

CPW will also benefit from its partnership with AOL for portal advertising, content and other internet-based applications, relatively small but fast-growing value-added services in which CPW has little experience or market position, which will prove important in terms of both customer retention and margins.