The sector rebounded slightly in the quarter to December thanks to a seasonal improvement in the roaming drag, although the partial lockdown tempered the recovery.

We await imminent news on spectrum trading, and there may also be some licence fee reductions as a consequence of the lower prices in the recent 5G auction.

While the sector is likely to continue to struggle into Q1, the outlook is much brighter thereafter thanks to the annualisation and even reversal of some lockdown effects, and to higher price increases from the spring.

Market revenue growth sunk back to -3% in Q4 from -2% in Q3, with further backbook pricing and lockdown effects to blame .

Backbook pricing will improve with numerous price increases announced, but these will only start to take effect in Q2 2021.

Demand for broadband and ultrafast looks promising, but will also take time to filter through to revenue, with Q1 again lockdown-affected.

Ofcom’s full fibre regulation statement, released today, is largely as trailed, i.e. it allows BT’s Openreach considerable relaxation of wholesale pricing in return for building out full fibre.

On the longer-term regulatory prospects, Ofcom continues to be fair but more obtuse than it could and should be, unnecessarily dampening investor enthusiasm. Ofcom will decide on a case-by-case basis whether to allow Openreach to offer geographic/volume discounts, using slightly contradictory principles.

The publication and increased certainty may allow BT’s Openreach to extend its full fibre roll-out further, faster or even with external financing. The build plans of others will come under increasing question.

Ofcom’s second 5G auction concluded with proceeds half those of historic levels for a number of reasons.

The outcome is positive for all operators with no major surprises. The results imply a much more level playing field for the UK mobile operators than in the past.

A relief for the operators but proceeds for the exchequer will be disappointing, and ALF renegotiation may reduce their revenue steam further.

Facebook emerged from 2020 reporting record revenue growth of 22% over the year, built on its huge volume of usage, its simple buying tools and its trove of first-party data.

Facebook’s ability to match third-party data for targeting and attribution is also central to its success. However, Apple and Google are restricting data-matching tools like third-party cookies and mobile IDs, and Facebook is moving to minimise the damage.

Facebook is trying to turn its sites into storefronts by launching ‘Facebook Shops’. It is also taking public stands on the use of data for advertising, and on the need for brand-building in marketing plans. These are conversations all advertisers and media owners should be engaged with.

BT’s December quarter results were mixed, with revenue growth improving but EBITDA growth worsening, and next quarter will be hit by the effects of lockdown 3 on mobile, with B2B likely to be hit by business failures following the end of furlough.

BT has maintained/nudged up its financial guidance regardless, and there are plenty of positive longer-term signs, with subscriber growth strong in the quarter, pricing pressure easing, and full fibre roll-out and adoption progressing nicely.

Overall, we expect the road to continue to be bumpy, but a recovery by 2022/23 still seems very plausible, ultimately driven by the wholesale and retail benefits of full fibre, and perhaps helped if it can get ‘Digital’ right, a particular challenge historically for BT.

The Consumer Electronics Show (CES) this year was held virtually, with announcements revolving almost exclusively around the pandemic and addressing changing consumer needs. The evolving use of tech at home was a particular focus for brands as consumers are now demanding more of their homes than ever before.

Following a record 2020, ecommerce was a topic that garnered a lot of attention, with retailers emphasising the importance of a consumer centric 'digital first' strategy, accepting the fact that ecommerce is going to be bigger than it ever has been.

Amid increased tech use at home, moves to ban third-party cookies and impending regulatory changes to data collection in the US, the conversation around data and privacy was more prominent than ever before. First-party data is going to be more valuable, even if tracking restrictions limit what can be done with that data.

European mobile revenues remain decidedly in decline this quarter at -2% – a slight worsening since Q2 as the full force of cuts to intra-EU calls hits 

There are signs that dual-brand strategies may be reaching their useful limit as erstwhile premium customers shift to value

There is scope for some trends to slowly improve from here, although end-of-contract notifications will impact all markets before the end of 2020, with the UK first off the blocks in Q1
 

Low-priced quality tabloid the i has been bought by DMGT for £49.6m, a 4.5x multiple on historical operating profit. The sale provides a lifeline to JPI Media as Reach has withdrawn from negotiations for the local estate

The i signals growing confidence in consumer media at DMGT after a long period rebalancing the portfolio towards B2B, and new ownership serves as an opportunity to rethink and drive the i’s online service

Although the acquisition will be reviewed by the Competition and Markets Authority (CMA), we expect the deal to pass

Market revenue growth fell in Q3 to below 1%, and may drop below zero next quarter as existing customer pricing comes under more pressure

New customer pricing is however rising, and average pricing should rise much further as ultrafast increases in availability and popularity 

Political enthusiasm for full fibre should be welcomed, although some specific plans are likely to do more harm than good if implemented literally