Service revenue growth was up just 0.1ppts to 2.0% this quarter, as price rises in the UK and the peak of the roaming boost offset weakness elsewhere.
Price increases to combat inflationary cost pressures are gathering momentum—a potential revenue cushion as roaming tailwinds diminish and challenging economic conditions weigh.
Vodafone is battling strategic issues in most of its main markets—significant change in strategy will be required from the new leadership.
European mobile service revenue growth increased by 1ppt to +1.6% this quarter, with this improvement largely driven by higher-than-inflation price increases in the UK.
The outlook for Q3 is mixed with an increased roaming boost expected, but the B2B sector will remain challenging and the impact of the rollout of out-of-contract notifications in EU countries will mount.
There are signs of some upward pricing movement beyond the UK, particularly in Spain as the operators seek to cushion the blow of rising costs and inevitable economic pressure.
Iliad has reportedly tabled a bid for Vodafone's Italian operations—unsurprising given challenges in that market for both players.
Press reports appear to be a concerted effort to pressure Vodafone to deal. There is the potential to resolve Vodafone's leverage issues, but there are implications for Vantage Towers.
Regulatory approval remains very much in question, but it makes sense to test the system with the potential for very positive read-through elsewhere. If a deal can be struck, it will likely be just the beginning of a long and checkered road.
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
Late entrant Bouygues Telecom is gaining broadband market share via the quad play. Orange and SFR have now also launched quad plays, but Iliad’s mobile offers will be ready only in 2012
Iliad hopes to use its new Freebox to energise recruitment around new IPTV services in Q4 2010. SFR will also launch a new box
Led by a likely VAT hike for triple play bundled IPTV services in 2011, triple play pricing is set to rise after many years, from €30 to €35/month. FTTH upgrades in urban areas will be gaining visibility this winter
France’s altnet Iliad again delivered stronger than expected profit and cash flow growth in 2009 on the back of continued strong results at the Free brand and a positive contribution from the Alice brand
These results demonstrate the continued pull of Free for the triple play customer despite intensifying competition, including from cable, making the low cost, low churn business model sustainable
By 2012, we expect fixed line profitability to increase and deliver enough cash flow to finance the launch of the Free Mobile project
Despite the recession, in 2009 the French broadband market added 1.8 million connections to reach 19.6 million, but we expect the deceleration in growth to persist in 2010
Orange’s leading position weakened further in Q4 2009, despite retail price cuts, and we expect a further decline in market share in 2010, impacting FT’s top-line
SFR was the star performer of 2009, although its Ebitda margin has improved slightly. Iliad remains the ‘best in class’ in terms of profitability, but must address high churn at Alice. Bouygues’ fixed line début was an impressive splash – at a cost