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.
Facebook's audience and consumption growth is now generating substantial and rising display advertising revenue, with consensus estimates of $2 billion in 2010, up 160% YoY, and it will overtake Google on this count this year
The social network's growing position as the centre of the internet experience is enabling it to become a platform for other services, such as e-commerce, making it an increasing strategic threat to Google, as well as other players in the digital media
More importantly, like Google before it, Facebook’s scale and function has the power to disrupt the digital e-commerce and marketing models built over the past decade
Some of Ofcom’s proposed wholesale charge controls for Openreach fixed access services sound stringent
However, we estimate that the overall financial impact on BT and other players is likely to be very small
We do not expect the proposals to result in changes to many retail prices, but they should tilt the playing field slightly in favour of BT Retail’s competitors, particularly smaller providers of broadband and business services
European mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative
While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France
The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months
Smartphones are rapidly moving to become a majority of UK mobile handset sales, driving a surge in mobile internet use. Even if usage per user (currently growing) flattens out, we forecast mobile internet usage to grow from 1.8bn hours in 2010 to 7bn in 2015: 28% of total online time
This should drive the long promised growth in mobile advertising and we project UK spend, including search and display, will rise to £420 million by 2015, equivalent to 10% of PC internet search/display advertising
We expect the majority of this usage to be incremental to PC-based consumption, as users find new things to do and buy on the mobile web, driving the overall online advertising market to further growth
By 2015 we expect internet-centric smartphone penetration in the UK to reach 75% and mobile internet use to reach 28% of total time spent online. The dynamics and ecosystems of the mobile internet, and in particular the app model, will become a significant part of overall digital strategies
First seen as an interim reaction to slow networks and small screens, mobile apps have become a major new route to market for publishers and ecommerce providers, and are likely to spread to new areas
However, Apple is likely to continue to lose share in the internet-centric smartphone market, and publishers will face a far messier, fragmented world of competing platforms, app stores and payment systems