CPW grew its core European mobile handset distribution business in underlying like-for-like revenue terms by 3% in the March quarter, and its profits grew by 18% in the 2009/10 year, although connection volumes and actual revenue fell during the quarter

Growth is improving with the recovery, but not dramatically, as its strong competitive performance during the recession is unwinding to some extent. Nonetheless, 2010/11 should see continued improvement, with handset trends still generally going in CPW’s direction

The company is currently more than covering the start-up losses at its ‘big box’ consumer electronics business in the UK through steady growth at CPW Europe and dramatic growth in the US, and should continue to do so in 2010/11. However, thereafter there is far more uncertainty, as the big box business will have to start trading well to prevent accelerating losses, and we have no visibility over its prospects as yet

Internet advertising rose 4.2% YoY in 2009 on a like-for-like basis in the UK, according to IABUK/PwC, due to growth in search, with classified and display down; however, previously unreported spend, including Facebook, pushed the total to £3.54 billion

Last year, for the first time, Google accounted for over half of spend (versus one third in the US) and 12% of UK ad revenue, a market presence that is significantly larger than in the US

Including Facebook, now No.1 for display, and increased spend on search, our 2010 growth forecast is 11%, pushing total spend to £3.82 billion or 25% of UK advertising

Despite the recession, in 2009 the French broadband market added 1.8 million connections to reach 19.6 million, but we expect the deceleration in growth to persist in 2010

Orange’s leading position weakened further in Q4 2009, despite retail price cuts, and we expect a further decline in market share in 2010, impacting FT’s top-line

SFR was the star performer of 2009, although its Ebitda margin has improved slightly. Iliad remains the ‘best in class’ in terms of profitability, but must address high churn at Alice. Bouygues’ fixed line début was an impressive splash – at a cost

Mobile content is moving to the centre of strategies for online
media. At MWC, the world’s biggest mobile conference, Google announced it now develops
all products ‘mobile first’ and Facebook reported a quarter of its 400m users access
the service through mobile

Three years after the iPhone 
launched, the handset industry is catching up, adding decent user interfaces
and mobile apps to colour touch screens and taking easy access to mobile content
beyond the iPhone

Beyond the self-selecting early adopter iPhone base, we found
real evidence of companies already successfully providing mobile content to much
wider segments of the population

The internet continues to gain share of media consumption and advertising at the expense of traditional media in the UK. This report highlights key online trends in the UK and our current forecasts for internet advertising in 2010 (we will address mobile advertising separately)

Recent news flow – including Google UK’s Q4 2009 results and reports of facebook’s rapid revenue growth – points to a better than expected recovery in internet advertising. On a like-for-like basis, we estimate that online ad spend grew 2.2% last year to £3,425 million or 23.5% share of total advertising

We have raised our 2010 UK forecasts and now predict that Google’s UK gross revenue will grow 12.5% YoY, helping to drive online advertising spend up 7.6% to £3,685 million (excluding sites currently not reported by IABUK/PwC)

The economy remains an issue, with the potential impact of tax rises and cuts in Government spending in H2 threatening the already anaemic recovery. In our view, the balance of risk is still on the downside

At TalkTalk Group (TTG) net broadband additions were solid, possibly helped by stronger growth in total market demand; but churn at Tiscali UK appears to remain high

TTG revenue was heavily distorted by the Tiscali acquisition but appears to remain in gradual decline on a like-for-like basis, due to continuing decline in non-broadband customers

Carphone Warehouse’s like-for-like distribution revenue showed a firm pick-up in the quarter, with it likely enjoying the first quarter of significantly improving market growth since the recession started