The launch of the fourth mobile network operator in France has so far met with dramatic success, gaining around 1.5 million subscribers in the first month, driven by rock-bottom pricing and a clever mass media PR campaign

Its tariffs are, however, so low that it is very hard to see how they are sustainable in the longer term. In the short term, Free’s economics are boosted by asymmetric voice and text termination rates that result in other operators’ customers effectively subsidising Free subscribers by €5 to €10 a month

This arbitrage is very likely to disappear over the next two years, but Free Mobile can increase its prices when this occurs. Its challenge will be to acquire a critical mass of subscribers before this point, and to retain them thereafter

Facebook’s IPO prospectus confirms that the social network is an internet colossus, with 845 million users worldwide and $3.7 billion in revenue in 2011

Growth potential in display advertising, which accounts for the majority of revenue, seems limited with increasing mobile substitution in major ad markets and future user expansion largely in lower yielding countries

There is significant potential to increase income from payments and other businesses beyond social games, but the company’s strategy is unknown at this point

Google’s UK revenue grew 23% to £676 million in Q4 2011, taking 2011 revenue to £2,525 million, up 20% year-on-year, 2 ppts below our November estimate

Globally, gross revenue rose 25% year-on-year, with mobile and display performing strongly, but rising costs pulled net revenue growth down to 8%

Our growth forecasts for Google’s UK revenue remain unchanged; we expect UK internet ad spend to rise from £4.7 billion last year to £5.8 billion by 2013, representing 35% of total advertising, as print continues to fall

Facebook is winning the battle for eyeballs and advertising in the internet display arena, with revenues projected to reach $5.3 billion in 2012

By comparison, we expect Google to achieve revenue of $2.5 billion, after traffic acquisition costs, though it remains the king of internet advertising, due to its dominance of search

Increasing advertiser demand for scale and performance will make many publishers increasingly reliant on one or both of the internet giants for audience and revenue growth

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

This presentation analyses the social games market in the UK. UK consumer spending on games software, like other recession-battered markets, has been flat for the last two years. At the same time, however, there has been rapid growth in PC-based social gaming, fuelled by the free to play nature of most games and viral marketing capabilities of social networks particularly Facebook. By 2015, we estimate that social gaming across PC, mobile and tablet devices could be worth up to £400 million, though much of this is likely to be driven by adding ‘social’ layers to existing games franchises.

Internet advertising grew 15% YoY to €17.7 billion across Western and Central & Eastern Europe in 2010, according to provisional figures from IAB Europe

As in the US, growth in display, increasingly powered by social media, outpaced that of search, with display accounting for 33% of spend (up 3 ppts YoY)

We have updated our forecasts for 5 key markets – UK, Germany, France, Italy and Spain – and now project aggregated growth of 10% in 2011 and 13% in 2012

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

French ISPs are about to enter a disruptive four month window of penalty-free broadband subscriber churn, triggered by the VAT rise on IPTV

SFR has followed Iliad’s Free by offering unmetered fixed-to-mobile calls at the risk of ARPU decline

We expect Free’s market share to stabilise, whilst those of SFR and Bouygues should rise to the detriment of Orange

France’s Iliad will rekindle broadband subscriber recruitment with its Freebox V6 (router and TV set-top box), and extension of the triple play to include unmetered fixed-to-mobile calls

Freebox V6 is positioned as an innovative premium quasi-PC device including a 250GB PVR, a Blu-ray player, a game console and a web browser, re-establishing Iliad’s technology leadership

Iliad expects that V6 subscribers will be less profitable in the short term than in the medium term, but cumulative free cash flow guidance for the ADSL business remains unchanged for 2010-12