Vodafone Europe’s service revenue growth dipped by 1ppt in the March 2011 quarter, but nearly all of this was due to regulated MTR cuts, with its competitive performance actually improving again

The combined Europe and common cost EBITDA margin was actually held flat in H2 10/11 on H2 09/10, aided by some heroic (and, frankly, uncharacteristic) cost cutting efforts, with Vodafone’s cost profligacy days apparently behind it

The outlook for next quarter is poor due to the UK MTR cut, but we then expect revenue growth to steadily improve for the rest of the year, with smartphone-driven data growth a help rather than a hindrance

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

H3G Europe improved its revenue growth and margins in 2010, albeit not by as much as its headline figures claimed. It is currently growing at 5% with EBIT at around breakeven

Given that its parent company is likely to want to keep EBIT positive, it is likely to be constrained on future investment in subscriber growth, limiting its potential going forward

The UK was particularly strong, with dramatically improved contract subscriber growth, and margins improving despite this, driven by the completion of the T-Mobile network share implementation helping margins and the smartphone revolution playing to the company’s 3G network strengths

Ofcom is proposing to design the 800MHz and 2.6GHz spectrum auctions to ensure that the UK mobile market remains at four players, through a complex set of rules largely designed to help H3G get the spectrum it needs to remain competitive

However, the sting in the tale is that Ofcom expects H3G to pay around £600m for this spectrum, which it may not want to do, and it is not clear what the backup plan would then be

We expect the general theme of regulators seeking to protect a fourth player to repeat across Europe and across regulatory areas, especially as the US market may consolidate towards three with AT&T’s proposed takeover of T-Mobile USA

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

Vodafone Europe’s revenue growth was broadly flat in the December quarter at 0.2%, but MTR cuts in Germany meant that underlying growth improved by 0.4ppts

Given flat economic growth in its key markets and the cold weather effect, this is a very respectable result, albeit not in line the company’s confident guidance given three months ago

With more severe MTR cuts scheduled over the coming quarters, and GDP growth forecast to not improve, revenue growth is more likely to decline than rise over the coming year