Vodafone has struck a deal to sell its ailing Spanish business in a deal worth €5bn, equivalent to 5.3x EBITDAaL.
While the pragmatism of the move will be applauded, the valuation may be viewed as disappointing by some.
The deal removes an enduring drag on the company’s financials, providing scope for better European trends, but this is one of several challenges facing the company, with the dividend policy question now to the fore.
Service revenue growth almost doubled this quarter to 2.4% aided by price rises in the UK, Spain, and France, but remains well below inflation-levels.
The revenue boost from in-contract price rises will ultimately disappear as customers recontract, dampening the EBITDA outlook as costs continue to rise.
Operators are looking to other strategies to strengthen their positions, including edging up new-customer pricing, M&A, and attracting wholesale MVNO business.
Vodafone's headline revenue growth of +3.7% is actually a small decline once Rest of World exchange depreciation is accounted for. Europe, however, delivered an improving revenue trend to +0.4%, as signalled at Vodafone's FY results announcement.
The mix and operating trends are less positive, with growth driven by low-margin B2B, and subscriber losses accelerating in German fixed. Investors will be weighing up whether these results are green shoots of a recovery or another false dawn.
Although the company may reach its guided EBITDA on assumed exchange rates, it looks set to fall short in euro terms, which has implications for FCF and dividend cover.
We forecast broadcaster viewing to shrink to below half of total video viewing by 2028 (48%)—down from 64% today—as streaming services gain share of long-form viewing time.
On the key advertising battleground of the TV set, broadcasters will still retain scale with a 63% viewing share by 2028, even as SVOD and YouTube double their impact.
Short-form video will continue to displace long-form as video-first apps (e.g. YouTube, Twitch, TikTok) gain further popularity and others (e.g. Facebook, Instagram) continue a relentless pivot to video. This will expand the amount of video watched and transition habits—even amongst older demographics.
Providing home broadband connections via a mobile network (FWA) is gaining traction in certain markets where local conditions make it a viable alternative to fibre, such as New Zealand, Italy and the US.
FWA is a time-limited opportunity for most, with mobile traffic growth absorbing capacity for it and fixed traffic growth depleting the economic case. An ultimate shift to fibre is the best exit strategy.
In the UK, H3G's spare capacity could support up to 1 million FWA customers on a ten-year view—enough for a meaningful revenue fillip for H3G, but not enough to seriously disrupt the fixed market.
A combination of factors drove the worst quarter ever for big tech growth, though the secular shift online of the economy and society will continue.
Advertising demand is down, reflected in lower prices. Ads did better the closer they are to transactions, with variability by category.
Efficiencies and AI are the investor-soothing buzzwords going into 2023.
The post-pandemic recovery has lifted vacancies to a high of 1.27 million, at critical levels in hospitality and health—sectors impacted by the exodus of EU workers. We expect recruitment advertising for private sector roles to have risen 13% in 2022 to £746 million (noting base effects from lockdown in H1 2021), and will decline c.4% in 2023.
LinkedIn dominates recruitment advertising directed at professionals, leveraging its free global networking service. Indeed anchors the other end of the skills spectrum, which is low value and high volume, aggregating openings to create a scale proposition for jobseekers, using technology to target and match them with employers.
Specialists are surviving Indeed’s technology-driven business model by relying on human expertise and ancillary HR services to differentiate. Agencies continue to specialise in supplying workers to large employers for temporary positions. News publishers have retained a small but dwindling slice of recruitment advertising.
TikTok has reached a billion users worldwide just four years after its global launch, much quicker than social media rivals, though its ban in India is a drag on growth.
TikTok’s popularity with under-25s has contributed to a hollowing-out of Meta’s active userbase. During the pandemic, TikTok also expanded its reach among older demographics, cementing its position within the mainstream and posing a further threat to Meta.
TikTok could earn twice as much revenue as Snap in 2022, making it the first app to break out of the mid-league in years, with a huge runway for growth backed up by ByteDance’s remarkable success in China.
Alongside freezing the licence fee for the next two years, the government made it clear that it believes the fee is no longer the optimal mechanism to fund the BBC, demonstrating a willingness to remove it in 2028
What seems to be the government's preferred replacement, a subscription, is not ideal: there are structural issues that mean it would not be possible to have a service that all could subscribe to without a costly switchover
Furthermore, a subscription would undermine a number of tenets of public service broadcasting, most notably universality, breadth of programming and representing the diversity of Britain—naturally a subscription service would pivot to commercially efficient content that targets its subscribers and those most likely to subscribe
As private sector employers faced an unprecedented degree of uncertainty, the volume of vacancies fell 60% from 2019 to 2020, driven by the arts & entertainment, food & hospitality and retail sectors, leading expenditure on recruitment advertising to fall by 32%.
In 2021, vacancies for temporary placements are surging as society proceeds to unlock, with the near-term labour market tight, boosting expenditure on recruitment. Our concern is the masked unemployment in B2C sectors that will emerge should furlough end on 30 September.
Judging by global revenue trends in FY2020, professionally-oriented networking platform LinkedIn gained from demand for hiring served by paid-for listings, also filling demand for events. Indeed, which serves the high-volume but lower-value end of labour markets, with a less fruitful budget and cost-per-click model, suffered mild revenue decline.