UK mobile service revenue growth continued to improve, rising to 1.2% in Q1, a modest figure but still the best of the five largest European mobile markets, albeit weaker than the UK consumer fixed line market (4%-5%)

O2 continued to be the strongest grower of the ‘big 3’, and maintained over 40% share of contract net adds. Both Vodafone and EE appear to have suffered from the demise of Phones 4U, having been its biggest (and latterly its only) network operator suppliers. EE is also suffering from the gradual withdrawal of its Orange and T-Mobile brands, which is forcing it to work harder to both attract and retain customers

Vodafone launched a competitively priced consumer fixed broadband offer on 10 June. EE has shown that there is an opportunity for Vodafone to have some limited success cross-selling broadband through its shops, but O2's mobile-only success and EE's struggles in its mobile business suggest that this will not drive improved mobile performance

Vodafone Europe’s revenue growth improved again in the March quarter, but not by as much as the previous trend, or by as much as the mobile market in general

Operational trends look more solid, with data growth continuing to accelerate and Project Spring delivering improvements in some markets

The biggest blip was in Germany, a quad play market for Vodafone, and we remain sceptical of the operational benefits of convergence as Liberty Global merger speculation re-surfaces

European mobile service revenue growth improved for a fourth consecutive quarter jumping 1.7ppts to -2.7%, the slowest rate of decline in over three years. Easing declines in France, Italy and Spain largely drove the improvement but a full recovery in these markets is still some way away given that all of their growth rates remain below -5%. The UK, and now Germany, are experiencing positive mobile service revenue growth although their improvements in the quarter were more modest

Three announced consolidation transactions have yet to be approved by the regulators although none of these deals are likely to offer much market repair, being either of the wrong kind of deal or being in markets that are growing. Consolidation targets remain in France, Italy and Spain which offer clearer routes to market recovery as seen in Germany where the consolidation of O2/E-Plus has already led to positive rhetoric on medium term market growth prospects

Network investment continues with 4G roll-outs at or over 70% population coverage in all markets and targets being accelerated, supporting long term optimism in the sector. Strong data traffic growth coupled with the growing importance of data to service revenue give a clear focus for operators on value-adding network quality investment, although the impact of pricing competition in some markets could weigh on the ability to capitalise on these trends in the medium term

News has entered a new phase, defined by the disruptive forces of mobile, social media and video, effecting rapid changes in consumption and the underlying economics for news businesses: the level of change and innovation is rewiring the structure and financial models for news more quickly than many news providers are able to respond. While charging for news looks to be a successful route for some brands, we note that the scale of charging for the industry is substantially smaller than in print. Apart from this, three models are gathering traction: selling audience engagement; selling news services; and selling news to businesses. Each of these options involves very different strategies and opposing objectives which can only be pursued at the same time by those with the deepest pockets. Everyone else has to choose.

Vodafone Europe’s service revenue growth continued to recover into its Q3, with the growth of -2.7% a further improvement of over 2ppts

This was largely driven by improved subscriber numbers, with contract ARPU in general still falling, although in the UK it notably returned to growth, with the pending consolidation bringing both threats and opportunities

Vodafone’s Project Spring investment appears to be bringing benefits before it is even halfway complete, boding well for its future impact

Customer movement between operators shows susceptibility to dynamism in branding; O2 are picking up the majority of EE churners as customers move to the new “cool brand” while EE pull in Vodafone churners tempted by the new “best network”. O2 have the lowest churn though the lion’s share move to Vodafone and H3G churners are more evenly picked up by the other three

Customer perceptions of own operator network quality are high among the big 3 with no less than 75% of customers reporting theirs is the best network. O2 is the best regarded while H3G is the least best regarded highlighting a stark contrast between the (prospective) merging parties

Consumers report little interest in quad play and indeed operators in the both fixed and mobile markets have publicly confirmed the same from other market research. However the arrival of converged players in the form of a merged BT/EE or Vodafone re-entering the fixed space will see operators seeking to change this

Vodafone Europe’s service revenue growth declined again in the September quarter to -4.6%, but on an underlying basis it improved, and volume growth also improved, suggesting that improving economic fundamentals are starting to feed through

Margins again fell, with the net benefit of the cost reduction program a long way from compensating for revenue declines, but overhead costs are at least dropping in absolute terms

We are optimistic that revenue growth can continue recovering in Europe, implying a still-depressed 2009/10 but a much better 2010/11, with positive revenue growth in 2010/11 a real possibility, and that the company could stabilise margins if it sticks to cost reduction plans, and resists the temptation to ‘reinvest’ in ‘strategic’ initiatives

Vodafone has launched a suite of internet services, platforms and handsets under the ‘Vodafone 360’ umbrella brand

Our views are mixed: we applaud the contacts back-up service that will be available across a wide range of handsets, provided it proves user friendly, but are puzzled by the point of a Vodafone-designed user interface built onto a fairly obscure smartphone operating system

Overall, if Vodafone 360 can stimulate data usage amongst low- to mid-end handset users, Vodafone would profit in both revenue and loyalty terms, but competing at the high end with the likes of Apple, RIM and Google strikes us as both needless and futile

Vodafone’s European revenue growth continued to slide, down to -4.4% in the June quarter from -3.3% last quarter, which itself was a sharp drop

A substantial element of this quarter’s decline was driven by an acceleration in termination rate cuts in Germany, but the general trend is weak volumes driven by a weak economy

With a substantial termination rate cut in the UK taken from 1st July, we expect growth to decline again in the September quarter, before stabilising/improving for the rest of the year

Vodafone (and others) are reported to be interested in acquiring T-Mobile in the UK, but any such merger would be likely to face significant barriers from regulatory authorities

This achievement would be moderated by ‘integration leakage’, i.e. increased churn caused by customers leaving who were initially attracted by an aspect of one of the operators that disappears after integration, but the net result should still be positive for the JV

The remaining UK operators will benefit both from this churn and the reduction in competitive intensity associated with five players dropping to four. While all the operators may win, UK consumers might lose, with regulatory clearance thus still far from certain