In-contract price increases have been the worst of all worlds—reputationally damaging for telecoms operators but contributing (temporary) revenue growth of just half the rate of inflation. We expect the revenue boost from in-contract price increases of 5% last year to become a 2% drag from Q2 2024.

Cost inflation is, however, cumulative with an acceleration in the gulf between costs and revenues forecast from here. We expect muted financial guidance for 2024/25 from BT Consumer and Vodafone UK over the coming weeks.

Rising new-customer pricing is a necessity if margins are not to be significantly squeezed, but competitive intensity and scale economics continue to thwart such efforts, with no real resolution in sight.

IFPI reports trade revenues from streaming rose 10% in 2023 to reach $19.3 billion, and we estimate Spotify contributed about $7 billion. Spotify also rewarded music publishers with about $2 billion in royalties. 

Spotify’s Loud & Clear data on royalties paid to the 225,000 professional and aspiring artists served to its 600 million users reveals a bulge in the middle part of the distribution in favour of Spanish language artists as the service expands in Latin America.

The top 1,000 earners are mainly artists at the top of the charts in the US and UK markets, which together contribute half of Spotify’s revenues and thus royalties. Top earner and top all-time streamed artist Taylor Swift earned over $100 million in 2023. 

Market revenue growth was solid at 1.6% in Q4, but subscriber volumes were weak, and ARPU was supported by price rises.

Price rises will be much lower in 2024, with no ease in sight for volume growth, which will likely lead to much lower or even negative revenue growth.

The altnets are adding significantly to incumbent pressure, and their consolidation may ease or worsen this depending on its form.

Direct greenhouse gas emissions from the UK telecoms sector equate to around 0.1-0.3% of the UK total. Most operators have set targets to reach net zero across their direct emissions in the next 10-20 years, with the move to electric vehicles an obvious win.

Network upgrades to 5G and fibre have the potential to cut emissions from electricity by a factor of 10, and consolidation offers further decarbonisation upside.

The industry could enable emissions savings in other sectors equivalent up to 30x its own by averting the need to travel and through IoT applications, with the latter requiring careful commercial assessment given the financial constraints in the industry.

As viewing moves online, broadcasters’ on-demand players make up a growing proportion of viewing, becoming central to their future strategies.

However, even though SVOD viewing might have begun to plateau, BVOD growth cannot yet balance the decline of linear broadcast.

Of this shrinking pie, 2023 saw most of the major broadcast players increase their viewing shares.

While altnets continued their strong expansion in 2023, a slowdown in 2024 is looking very likely, with financing drying up due to tougher financial conditions and disappointing operating performances from some.

Consolidation is the obvious answer, and the altnets could consolidate into a pure wholesaler (via CityFibre), a retail/wholesale player, or could be absorbed into VMO2/nexfibre.

Which of these routes is taken, and how quickly, will have a profound impact on the structure of the industry, and all players should be careful what they wish for, with long-term outcomes hard to reliably predict in such a complex marketplace.

According to press reports, VMO2 is in early stage discussions over buying TalkTalk’s consumer retail broadband business, but not its wholesale business, which may leave the latter in limbo.

There is strong industrial logic to the deal, with a sub-brand useful, and significant synergies from moving the TalkTalk base to VMO2’s network, with the latter gain at Openreach’s expense.

There would be major regulatory hurdles for the deal, with concerns on both a retail and wholesale level, and particularly the future of the altnets, with any deal likely having to protect this.

BT’s Q3 was robust in financial terms, delivering revenue growth of 3% and EBITDA growth of 1%, both in-line/ahead of analyst expectations.

Strong broadband ARPU and accelerating FTTP performance at Openreach were the highlights, a weakening BT Business and continued Openreach broadband losses were the main concerns.

This year’s guidance should be easily met, next year’s will be trickier given lower price rises due in April, but the long-term plan of a massive cashflow turnaround when the FTTP build ends is still well on-track.

Recorded music revenues in Japan are stuck in decline as physical sales sag, although 2017 marks the first year when streaming gained a foothold with 8 million subscribers. 

J-pop fans spend on 'experiences' with their idols including events, merchandise, CDs and DVDs, which streaming cannot replicate. Top native LINE MUSIC offers integration with a popular messaging app and bundling with mobile. 

Serving international repertoire, Apple Music claims more subscribers than Spotify in Japan, which is more localised, and has most users on the free tier. Amazon Prime Music is a looming constraint on the adoption of subscriptions. 

Spotify is now the world’s first publicly listed on-demand music streaming service. Its global footprint generated €4 billion in 2017 from over 70 million paying subscribers and 90 million ad-funded users across 65 countries

As it expands, the service is steadily but surely moving ever closer to profitability, with a 2019 operating profit a very real prospect

So far and for the near future, Spotify’s global pre-eminence versus competition from Apple, Amazon and Google proves remarkably resilient. Plans to build upon its differentiating features will become ever more decisive as the tech titans will continue to wield their resources and ecosystems against the comparatively undiversified company