In the year following its IPO, Reddit has defied our expectations, reporting five straight quarters of positive adjusted operating income and strong growth.
Profitability stems from disciplined cost management alongside exceptional user growth, with a focus on advertising performance and limited distractions.
The platform's human-generated conversations are proving valuable in the AI era, but AI strength could become a vulnerability if synthetic content overwhelms authentic discussion.
The USA is reshaping the global economic order in defiance of trade treaties; however, the rest of the world is observing trade treaties and absorbing the shock of the tariff wall erected around the US market.
The UK is relatively spared among the 90 origins hit by the USA's tariffs on imports of goods, which do not apply to services' exports to the US, twice the value of goods, including media (e.g. TV programmes) and advertising services.
The timing of the deteriorating global outlook is poor due to the headwinds facing the UK economy that are impairing the recovery of advertising in 2025.
Most regulations within the TAR26 condoc were continuations of the previous pro-investment regulations, albeit with little progress made on copper withdrawal, no extra help for the struggling altnets and a number of unexpected twists at the margin.
Within the detail, the most significant hit is the return of cost-based price controls to some leased line charges, and across all of the proposed changes, Openreach has on balance fared worse than retail ISPs, albeit at a scale that is manageable within the BT Group.
Ofcom showed no inclination to offer any extra help to the struggling altnet industry, regarding its inefficiencies as being its own (and its investors’) problem, with consolidation the only sensible path forward for most.
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Trump II is already proving to be a more serious threat to an independent, robust news media than Trump I.
Trump’s direct power around news media is limited, but the threat comes from an unprecedented politicisation of federal regulators, enforcement and procurement—to favour friends and punish enemies.
Opposition to Trump II is weaker and more divided than the broad ‘resistance’ to Trump I. Big tech companies are going for a close embrace, hoping to steer policy to their advantage—while others bend the knee to avoid punishment.
The ‘big 4’ ISPs’ combined revenue remained in decline in Q4 2024 at -0.4%, partly due to a BT accounting quirk but mainly due to altnets gaining share
ARPU growth of 2% is roughly compensating for subscriber declines of 2%, but this ARPU growth is likely to weaken in 2025 as various boosts drop out
A recovery will come as the altnets slow in H2 2025 (if not before) due to their restrained expansion, which cannot come soon enough for the big ISPs
The requirement for accurate audience measurement led to the creation of separate industry JICs— developed by media owners, agencies, advertisers and trade bodies—used for planning and as credible trading currencies.
However, now as brand advertisers need to be able to optimise campaigns across all audiovisual—and ideally all display—they want full cross-media measurement, and are therefore investing in the Origin platform.
But not all ‘views’ are equal; context is important. While most advertisers understand this, there is a risk that some ascribe the same value to all AV. Broadcasters are understandably wary.
US big tech companies are deploying hundreds of billions of dollars to remake the global economy in their image, as enviable growth contrasts with layoffs and low morale.
The cost of using AI models will fall in 2025 and make more AI applications possible. Regulation is caught between pressure from Trump and investigations that must go on, such as digital markets.
Microsoft and Google have tied their fortunes to AI. Amazon and Meta stand to realise business gains from AI, while Apple is the outlier: capex declined in 2024 as it focuses on iPhone and services.
CityFibre has reported positive EBITDA in 2024, albeit at a slim 4% margin, and still needs further scale—and to successfully onboard its new wholesale customer Sky—to drive decent investment returns.
CityFibre’s organic build rate is dropping sharply as it (sensibly) looks set to rely on consolidation to achieve the required scale, with its organic build focused on Project Gigabit areas.
CityFibre remains well-positioned for consolidation, but this may take some time yet, with the altnet sector set to slow organic progress anyway in the interim.
BT had a solid-but-mixed Q3, with revenue growth slightly weaker than expected, EBITDA growth slightly stronger, and subscriber net adds a touch weak across broadband, mobile and Openreach
The outlook is buoyed by a likely altnet slowdown at some point in FY26, with this set to help subscriber numbers at Consumer/Openreach and pricing at Consumer
The main cloud is the potential effect of a merged Vodafone-Three challenging BT/EE for best network and boosting MVNOs, a challenge we feel is real but manageable for BT
The mid-sized UK altnets Zzoomm and FullFibre have agreed to merge, in what looks like an all-share merger of (nearly) equals, both of whom have been struggling to raise finance.
Why did they pick each other rather than the larger CityFibre/Netomnia/nexfibre options? Valuation may have been the key factor, but it has left them still vulnerably low scale with further consolidation necessary.
Much more consolidation is required for the sector to be sustainable in our view, and further financial distress may be required for realistic valuations to emerge.