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.
 

Whether to allow a Vodafone/H3G merger is essentially a trade-off between range of consumer choice and costs of network duplication. With the need for the former diminishing and the latter increasing, the case for approval is strengthened.

H3G is in a negative spiral of small scale, low investment, and low returns. A merger would allow it to form part of a more credible competitor with a transformed returns profile—without rising prices or reduced industry investment levels.

The CMA’s aversion to mergers has been very stringent of late—an approach that risks deterring investment and compromising competitiveness. Consolidation in UK mobile is unlikely to happen without a change of mindset.

Reportedly, BT Sport is about to seal a deal to extend its coverage of the revamped Champions League until 2027. Amazon is going to step in with a weekly game, and the BBC will get the rights to the highlights.

In France, Canal+ has outbid Amazon to claim the full rights package thanks to a bid that has grown the total value of the rights by 28%.                                  

With Canal+’s football content secured, the upcoming Ligue 1 auction may struggle to find bidders, a fate threatening other short-sighted leagues.

With more clubs, more games and no long Christmas break, the revamped Champions League (CL) will test its value to broadcasters with a tender that has just been released in France, over two years before the cycle begins

UEFA is banking on the rivalry between Canal+/BeIN, the ongoing rights-holders, and Amazon, broadcaster of Ligue 1 in France, and of the CL in Germany and Italy

Prime’s economics point to Amazon sticking to cautious, ‘value’-driven bidding in France. It could expand its limited sports line up in the UK and Spain with the CL, but only if current licensees BT/Warner Bros. Discovery and Telefónica take a step back from 100% coverage

Whilst we remain sceptical of the churn reduction benefits of fixed/mobile convergence, the pandemic and a more astute approach from the operators is enhancing the case for it in the UK.

Creating the impression of a giveaway whilst minimizing the effective discount is key, as is extracting any loyalty and cost benefits.

Even if well executed, any upsides are likely to be modest. Operators are right to keep discounts to a minimum and to avoid M&A premia predicated on fixed/mobile convergence synergies.

The UK government is on the cusp of introducing legislation that will force online platforms to monitor and mitigate the presence and spread of harmful and illegal content, in a regulatory first for big tech.

Affected companies should take note: they will need to prepare for a higher level of transparency and communication with regulators, and larger service providers will require expanded moderation, user verification and research capabilities.

Users should be protected as platforms balance complex competing duties. News publisher content has a carveout, but publishers may experience butterfly effects as the online environment is reshaped.

The UK mobile operators are increasingly vocal about their concerns regarding the tech giants, namely Apple and Google, encroaching on the mobile connectivity market.

eSIMs enhance the case for the tech giants launching their own MVNOs (such as Google Fi in the US) or, perhaps more realistically and concerningly, becoming gatekeepers to mobile airtime subscriptions.

Many things would need to line up for the tech giants to effect this and the MNOs need to stand as one to ensure that they are not successful. Policy makers should be equally reticent.

The UK net neutrality rules are up for review; as usual, the operators are pressuring for relaxation, and there are strong arguments that the competitiveness of UK telecoms markets make such rules innovation-quashing with no consumer benefit.

The chances of mainstream video content providers producing a windfall for telcos are slim, but there are a host of more intensely commercial content providers which have far greater potential to pay extra money for higher quality content delivery.

Future services such as virtual and augmented reality will stretch even FTTP/5G networks; allowing the telcos to develop custom business models to facilitate their delivery may well speed up the development and implementation of the metaverse in the UK.

21CF’s bid for 100% ownership of Sky has been referred for a Phase 2 investigation to the Competition and Markets Authority (CMA), which will decide by 6 March 2018

Third parties Avaaz and Ed Miliband MP complain of the influence of the Murdoch Family Trust (MFT) and family members over the UK’s news agenda and political process 

A remedy could insulate Sky News from this influence. The offer of a Sky News Editorial Board at Phase 1 was refused. Third parties will ensure the debate in Phase 2 is very lively

Across Europe, markets are becoming more competitive. Incumbent pay-TV paltforms (e.g. Sky or Canal+) face increasing threats from both internet-based services (e.g. Netflix and Amazon), and telecoms operators

Telecoms providers are proving the most potent challengers as they enter the premium football rights market to create attractive triple and quad play bundles – examples include BT, SFR and Telefónica. The latter is now the main pay-TV operator in Spain whereas France’s Canal+ has entered into a strategic alliance with Orange

Across the top five markets (UK, France, Germany, Spain, and Italy), Sky remains the leading operator with an estimated 21.5m video subscribers, twice as many as Netflix