The CMA has approved the merger of Vodafone and H3G, paving the way for the UK’s largest mobile network operator.

Remedies are in place to ensure pricing stability in the short term, with the increase in sector capacity keeping the pricing side of the equation in check over the longer term, together with network quality upsides for users.

This is the right outcome in our view, with the alternative of a slow, painful retreat by H3G much less desirable for the industry. BT/EE will face the greatest challenges in adapting to the new market structure, with upward pressure on capex spend for all network operators.

Broadcasters have made considerable progress in becoming platform agnostic over the past three years, delivering innovative ad propositions offering greater targeting, flexibility and measurement. 

They would welcome the opportunity to work with advertisers to explain the complexity involved in delivering linear and digital campaigns. 

Broadcasters believe that although TV advertising is transitioning to digital, legacy share deals and reliance on pricing relative to ITV1’s station average price (SAP) continue to hold the market back. Potential amendments to CRR may allow for a smoother digital transition, benefitting the entire ecosystem.

Service revenue growth flat-lined at -1% this quarter. The operators’ year-to-date net adds remain in negative territory while the MVNOs have taken more than 1 million
 

The accounting treatment of the new, absolute, in-contract price increases will provide something of a boost to some operators this year, but worsen the trend next year, particularly for BT/EE
 

The likely Vodafone/Three merger will be the primary theme for the industry in 2025 and beyond, putting upward pressure on capex levels industry-wide 
 

Under financial stress, most streaming platforms are increasingly focusing on third-party distribution. Thanks to bundling, top streamers like Netflix can increase the lifetime value of subscribers, while smaller streamers widen their reach.

Bundles of streamers may have some potential in the US, but in Europe—with Netflix not interested—they do not have the necessary scale.

This trend towards bundling favours incumbent pay-TV aggregators like Sky and Canal+, but in the longer run they face competition from tech video marketplaces.

Vodafone’s Q2 performance was in line with the company’s guidance on almost every metric and was always going to be a tough one given the hit from TV losses in Germany and the annualisation of price increases there

The share price reaction (-6%) is likely a reflection of fears around Vodafone’s ability to improve underlying operational performance in Germany. Whilst this remains a valid concern, there is nothing in these results to amplify our worries on the issue

Escalating competitive pressure in German mobile is, however, a threat to the company’s growth outlook, and Vodafone’s promise to be “disciplined” in its approach to it may turn out to be too conservative a strategy

Disney believes it has turned a corner, laying out positive forecasts for the next two years, featuring annual, double-digit EPS growth. Streaming is now reliably profitable, although its low and generally inert ARPU will inevitably have to be stoked by more price rises

In the UK, Disney+ continues to trail Netflix in a number of core metrics—reach, engagement and habituality—but Rivals signals the potential of a positive trajectory

Similarly, although Disney's relatively patchy theatrical release schedule has had an effect on Disney+, a strong next six months should flow through to service growth

VMO2’s Q3 results were mixed, with underlying revenue and EBITDA slightly improving (but still negative), subscriber momentum slightly improved, but customer service issues still apparent.

The company’s broadband momentum is clearly being significantly curtailed by altnet gains (and Openreach overbuild), with substantial network expansion resulting in anaemic subscriber growth.

A return to growth in 2025 certainly looks possible, but it will depend on customer service issues being resolved, and industry consolidation going VMO2’s way. 

UK football rights values have pulled further away from European peers in a stagnant market, as telcos have withdrawn and tech companies remain selective bidders.

Sky and Canal+ have tied down key contracts until towards the end of the decade, while DAZN now has domestic rights for four of the top five European football leagues.

Tech players want live sport, but have distinctive demands and without new monetisation models they will not challenge pay-TV incumbents.

As Netflix transitions towards a reporting cadence that omits quarterly subscriber numbers, the focus is on revenue (+15% YoY, to $9.8 billion) and margin (+8ppts YoY, to 30%), which remain buoyant. The company has guided that 2025 revenues will be $43 to $44 billion (+$4 billion YoY), mostly due to subscriber growth

Netflix's advertising-supported tier is dragging its ARPU—however, given its important future growth role, we would expect it to start influencing the direction of the streamer's content slate

Despite its expansion into new genres, Netflix's UK viewing has further narrowed around drama and films: however, live sport, British formats and soaps could move the needle in the future

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We view the CMA's proposed remedies to the Vodafone/Three merger as workable, but not necessary.

While acknowledging the reassurance that short-term pricing commitments can provide, we are of the view that going too far risks distorting a highly competitive market.

Aggressive MVNO pricing commitments, in particular, could amplify a significant drain on the operators' capacity to invest, threatening the network promises that the companies are making.