In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

Vodafone Europe’s service revenue growth improved marginally in the September quarter, a very solid performance under tricky circumstances, helped by good competitive performances and judicious pricing measures

The combined Europe and group common function EBITDA margin was again held flat, despite continued smartphone adoption pushing up handset costs, with strong cost control again evident

Pricing, competitive, regulatory and cost trends are all going well; but macroeconomic trends are clearly not, and are likely to make an acceleration in the second half of the year very difficult

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

The most dramatic observation from our survey is the surge in mobile data service usage: 48% of UK mobile users now use a data service at least once a month, up from just 30% last year. This increase is substantially all from the increased number of internet-centric smartphones (i.e. iPhone, BlackBerry and Android handsets) in the base

The internet-centric smartphones themselves had substantially no reduction in data usage penetration rates (all at 90%+) despite their volumes surging, with users from all age and socio-economic groups using them for data services. Data service usage penetration on a daily basis actually increased for Android and BlackBerry handsets

This supports our view that it is the nature of these handsets in terms of their ease-of-use for data services that is driving overall usage, and that overall data usage will continue to surge as they continue to diffuse through the subscriber base

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete.

H3G Europe improved its revenue growth and margins in 2010, albeit not by as much as its headline figures claimed. It is currently growing at 5% with EBIT at around breakeven

Given that its parent company is likely to want to keep EBIT positive, it is likely to be constrained on future investment in subscriber growth, limiting its potential going forward

The UK was particularly strong, with dramatically improved contract subscriber growth, and margins improving despite this, driven by the completion of the T-Mobile network share implementation helping margins and the smartphone revolution playing to the company’s 3G network strengths

Ofcom is proposing to design the 800MHz and 2.6GHz spectrum auctions to ensure that the UK mobile market remains at four players, through a complex set of rules largely designed to help H3G get the spectrum it needs to remain competitive

However, the sting in the tale is that Ofcom expects H3G to pay around £600m for this spectrum, which it may not want to do, and it is not clear what the backup plan would then be

We expect the general theme of regulators seeking to protect a fourth player to repeat across Europe and across regulatory areas, especially as the US market may consolidate towards three with AT&T’s proposed takeover of T-Mobile USA

European mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative

While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France

The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months