Mobile growth improved very marginally to -3.6% this quarter as roaming revenues were harder hit and competitive intensity bounced back, but usage recovered from the lockdowns in Q2 and cuts to intra-EU calls were annualised.

Italy’s fortunes took a turn for the worse as roaming hit particularly hard and Iliad resurged. After a spate of downgrades to the outlook last quarter, there were some tentative upgrades in Q3 although the tone remains cautious.

The diminished drag from roaming is the primary positive driver from here. Although lockdowns of some degree are in place in Q4, their impact will be less severe than those in Q2.
 

Growth deteriorated by 3.5ppts, with the UK the weakest and Italy most robust thanks to its early onslaught of COVID-19, usage pickup in a largely pre-pay market and reprieve from a particularly competitive environment.

More operators (Orange and Telecom Italia) cut their guidance at the Q2 results and others (Deutsche Telekom and Iliad) sounded a note of caution regarding the likelihood of them reaching their full year targets.

The outlook for next quarter is mixed—roaming revenues will be even harder hit and competitive intensity is bouncing back but where usage has been depressed it will begin to recover well post-lockdown.

European mobile service revenue growth strengthened very slightly to -0.3% this quarter but, with many positive and negative factors at play, it would be wrong to conclude that we evidenced a convincing improvement in momentum.

Most operators have reiterated their financial guidance in spite of COVID-19 but there is caution from Vodafone and those exposed to sports rights (BT and Telefonica).

The outlook benefits from continued lockdown measures (reducing churn and spin-down) and the annualisation of some financial drags from the middle of next quarter. However, competition in Spain remains intense and the sector is exposed to any economic downturn.

European mobile market service revenue growth dropped again in Q3, by 1.9ppts to -6.2%. This was not helped by a substantial increase in the MTR impact, driven by a big cut in Italy, but underlying revenue growth still fell by 1.3ppts In stark contrast to Europe, the US mobile market continues to grow apace, with there being over 10ppts between the growth rates of the two regions. The most obvious difference between the markets is the very much higher levels of capex spent by the US incumbents, which drives their superior network quality and coverage, and hence price premia, and hence superior growth The European incumbents have not (yet) used their greater ability to spend on capex to increase the spending gap with smaller operators, with 4G launches (mostly) being low profile with low initial coverage (the UK being a notable exception to this). While this is an understandable approach given the prevailing macroeconomic conditions, it does mean that closing the growth gap with the US remains a distant prospect

Keen to reposition itself as a media conglomerate, Vivendi is considering merging SFR with private equity-owned Numericable and its B2B sister Completel, while reducing its stake in the new entity to below 50%.

Sizeable savings would come from migrating SFR’s fixed line subscribers in urban areas from Orange’s copper network to Numericable’s coax and FTTB, and from eliminating Completel’s LLU network and Numericable’s marketing spend.

In the short term, execution would be challenging and require sizeable capex. In the longer run, coax is a much cheaper alternative to investing in FTTH. The merger would put pressure on the other two altnets, Iliad and Bouygues, to consider consolidation scenarios.

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. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.

In this report we show our analysis of trends in UK broadband and telephony to March 2012, based on the published results of the major service providers.

Highlights for the March quarter include broadband subscriptions exceeding 21 million, a sudden uptick in broadband market net additions and local loop unbundling accounting for a record 40% of broadband subscriptions. The proportion of unbundled lines that are fully unbundled exceeded two thirds for the first time.

This quarter we also include a look at pricing, including prices for high speed broadband that show how BT Retail is using high speed broadband to reduce the price advantage of its competitors.

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. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.

Vodafone’s proposed acquisition of Cable & Wireless Worldwide is far from a done deal and is unlikely to be completed until September

The cost synergies are real but likely slim, with the main rationale being to cost effectively expand Vodafone’s fixed enterprise business in the UK, and to gain the expertise to do this elsewhere

The impact of an acquisition, while gradual, would reverberate for years to come. Wireline wholesalers, then corporate service retailers would be affected, notably BT. Later, the impact could spread to the small business segment. The prospect of Vodafone’s re-entry into the UK residential wireline market would remain distant but more likely

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. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.