H3G’s X-Series is not quite as innovative as it was presented to be, given that T-Mobile’s Web ‘n’ Walk is very similar in concept (flat rate data tariffs, 3rd party Internet services) and has been available since June 2005
Vodafone’s revenue growth has improved, with core underlying growth rising both relative to the previous quarter and relative to its competitors
Vodafone UK’s new broadband product is not very competitively priced compared to the offers from Carphone Warehouse and Orange, costing £5-10 a month more than the nearest equivalent packages
In a fit of pique over increasing subsidies, Vodafone UK is dropping Carphone Warehouse (CPW) as a distributor, and moving exclusively to Phones4U with lower subsidy levels and volume guarantees, while Orange is reportedly also considering its position with CPW
Vodafone is taking the first step in implementing its convergence strategy in the UK by buying broadband from BT Wholesale; while we believe the strategy is misguided, Vodafone’s approach is at least cautious
The company is at least unlikely to be losing money on the product, and is perhaps just sensibly testing the water for positive consumer interest in a bundled package from Vodafone
We expect the water to be very cold - results from Orange, NTL and BT suggest continued very low consumer interest in fixed-mobile convergence, and we doubt that Vodafone will fare much better
H3G has extended its deadline for hitting EBITDA breakeven, with this now around 12 months later than its previous forecast, we believe due to management failing to understand the extent of its churn problem
The Zune Marketplace is no match for the iTunes Store, with a smaller repertory of music and no video to supply the Zune, since Microsoft has announced it will soon sell video for the top-end Xbox 360, around which its ‘home-entertainment’ strategy is based
We figure the costs of switching to the Zune are low, but Microsoft will be lucky to sell 1 million Zunes in the Christmas quarter – if it does, revenue will rise by less than 1%, so the Zune is of limited interest, whether successful or not
Vodafone blamed a harsh competitive environment and the timing of Easter for its low revenue growth in core markets reported this week. Its growth did at least not decline again, although we expect that Vodafone will again prove to be underperforming its competitors as they report their figures over the coming weeks
CPW will also benefit from its partnership with AOL for portal advertising, content and other internet-based applications, relatively small but fast-growing value-added services in which CPW has little experience or market position, which will prove important in terms of both customer retention and margins.
Vodafone's performance in its core European markets is continuing to worsen in both absolute terms and in relation to its competitors, and its margin progression is weak
There is little evidence of a revenue meltdown
H3G’s 2005 results underperformed in 3 key areas: net subscriber additions were lower than promised, unit SACs were higher than promised and the group failed to reach EBITDA breakeven as promised
2006 promises to be much worse due to a markedly bigger drop of about 11.5% in weighted share of commercial impacts in 2005, due to a number of factors (not just multichannel platform growth), and an anticipated decline of between 2% and 5% in total TV NAR in 2006. Taking a mid-value of -3.5% yields a drop in ITV plc NAR of around £180 million in 2006
Vodafone’s discussions with Softbank to exit Japan could remove its most troubled and ill-fitting subsidiary, but only if the structure allows for a clean break, which will require tricky financial engineering given Softbank’s limited ability to pay
We estimate that savings for the typical French contract customer would actually be around 5%, and therefore not worth the extra handset cost and inconvenience involved