UK mobile market service revenue growth improved on both a reported and underlying basis by 1.2ppts in Q4, a very welcome result after six consecutive quarters of declining underlying growth. Reported revenue is still in decline, at -1.6%, but it is the most modest decline among larger European countries, and compares to -5.0% in early 2013 EE is still leading in 4G coverage and performance, with around twice the coverage of its nearest rivals of basic 4G, double speed 4G now covering around 30% of the population, and plans for quadruple speed 4G to launch in 2014. Vodafone may prove the biggest network challenger going forward, with plans to increase capex as part of its Project Spring initiative Maintaining (or increasing) the current level of pricing is key to the industry returning to revenue growth in 2014. We would note that the smallest operator, H3G, is fairly unlikely to return to being a price discounter and put pressure on market prices, leaving the onus on the ‘big 3’ to stay disciplined, with a small but significant risk from SIM-only MVNO offers gaining more traction

Explosive growth in take-up of smartphones and tablets means that the effective size of the internet will increase by several multiples within the next few years. This transformation in scale comes with a major change in character and operating dynamics, creating new opportunities and revenue streams.

Twitter is unique amongst social apps: it gives new users a blank canvas in which they can (and must) create their own social network reflecting their own interests, hence building an ‘Interest Graph’, but onboarding new users remains a challenge.

Revenue at Twitter is now on a $600 million annual run-rate, scaling rapidly since the introduction of ‘native ads’, and seems set for further growth: the key question is whether it can achieve breakout user growth and mass market scale.

Ofcom has been instructed by the UK government to charge the mobile operators ‘full market value’ for the 2G spectrum they have been using for many years, despite there being no liquid market for the spectrum

Ofcom’s general approach to such an imponderable question is eminently sensible, but we disagree with the detail of their methodology on three key aspects, which makes the current proposed charges over three times too high in our view, effectively charging the industry a one-off tax of £4.5bn

The elevated fee levels are (perhaps) still affordable on their own, but coupled with other recent regulatory decisions the UK is in danger of being seen as a hostile regulatory environment, with negative consequences for future investment levels

2013 has seen yet another year of strong growth in consumer adoption of mobile devices and screens adding to the challenges facing traditional media. Press and radio have long been affected, but television is now starting to feel the heat

BT and Sky’s contest for premium pay-TV sports rights has intensified. August saw the launch of BT Sport, while BT’s acquisition of the European football rights in November was a clear statement of intent, spending half of Channel 4’s total programming budget on approx. 200 hours of content

The UK has seen buoyant advertising growth of around 4% in 2013, with similar growth expected in 2014, in the context of the strongest economic recovery in Europe

YouTube (YT) held its first Brandcast in the UK in October, as well as in France and Germany, after staging similar events in the US. Google’s ambition is to compete more directly for brand and TV advertising in these core markets

At this year’s Brandcasts, YT highlighted its position as a complement to TV content and advertising, emphasising unique advertising opportunities for brands to engage with viewers through sponsored YT native and dedicated brand channels, in line with its new ‘brand partner programme’

In direct comparison to TV, online video advertising and viewing remains small. We project UK online video advertising to reach £305 million for FY2013f, representing 8% of TV ad revenue. As the dominant players, Google/YT are well positioned to grow display revenue by securing a large share of brand advertising moving online

UK mobile market service revenue growth improved on a reported basis in Q3 to -3%, but was unchanged on an underlying basis, still not a bad result after six consecutive quarters of underlying growth declining, albeit in the context of rapidly improving macroeconomic conditions

All four operators now offer 4G services, with O2 and Vodafone launching within the quarter and H3G in December. EE will nonetheless maintain its coverage and speed advantage for 2014, but others (most likely Vodafone) may challenge thereafter. H3G is offering 4G at no extra cost, reflecting its focus on unlimited data and meeting the capacity requirements for this, and O2 has recently cut its 4G tariffs to match those of 3G (but with a high minimum entry point), leaving EE the only operator with an explicit 4G premium

The overall outlook is mixed – we would expect some improvement to revenue growth into 2014 as the MTR impact wears off and the dilutive effect of unlimited tariffs wane, but this may be countered by a lack of mid-contract price increases, and while 4G is likely to benefit all as it drives data volumes and encourages package upgrades, the impact will be gradual

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

Apple’s two new iPhones both secure its grip on the high end (for now) and extend a cautious toe into (slightly) cheaper waters. They will not deliver a step change in global sales growth, but should deliver solid performance

9m unit sales at launch are impressive, but 200m updates to iOS 7 (double last year’s figure) point to the continuing strength of Apple’s ecosystem and its ability to deploy innovative new features

We continue to believe there is room in Apple’s portfolio for a $350-$450 phone without weakening Apple’s quality of experience or brand positioning, but this is clearly now off the agenda for another year

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

UK mobile market revenue growth improved in Q2, rising to -3.6% from -5.0% in the previous quarter, but we see this as driven entirely by an easing in the regulated MTR impact, with underlying growth actually dropping. O2’s revenue growth has continued to improve, Vodafone and EE’s revenue growth both improved roughly in line with the market, and H3G’s growth declined but remained much above the other three Both Vodafone and O2 announced plans to launch 4G on 29 August but both also have modest roll-out plans, with only 13 cities due to be covered by the end of the year, leaving both with less than half the coverage of EE, and H3G is not planning to launch until Q4. There is some debate over how much consumers are likely to value 4G, with a number of consumer surveys putting interest at a low level. Our own survey is consistent with this, but reveals that interest among high-end smartphone owners – who tend to spend more on handsets and airtime – is very much higher O2 is now selling all its upper end contract plans under the ‘O2 Refresh’ structure, which splits handset and airtime fees but in such a way as to allow it to make good margins on handset sales, a clever way to take advantage of smartphone popularity as opposed to working against it as many operators do. The other operators may well follow suit