BT Group’s revenue growth slipped back to 1.3% in Q4, but this reflected the reversal of various one-off boosts in the previous quarter, with underlying trends still solid across the group, with Consumer and Openreach still the standout performers

We do not think that BT’s approach of keeping the BT and EE consumer brands separate will maximize the cross-selling opportunity, but we consider this opportunity to be modest at best in any case, and therefore not worth the risk of a disruptive integration

On both fixed and mobile, BT is using cost savings to invest in faster speeds, better coverage and improved service to drive competitive advantage and price premia, a very sound strategy in our view

Short form video is growing. It is easy to create, share and, with the rise of mobile technology, incorporate within communication

But despite the novel flexibility that mobile technology offers, the actual video most desired is surprisingly traditional

Buzzy, short form content fills gaps that have always existed; yet, despite the hype, it will remain supplementary to long-form programming

European mobile service revenue growth was flat at -0.8%, while underlying country movements were somewhat more dramatic. The key highlights were Italy returning to positive growth driven by pricing stability, and France showing worsening growth decline for the first time in over two years impacted by challenger telco pricing cuts

An assessment of these challenger telcos highlights a somewhat precarious position, as continued price aggression yields diminishing incremental gains, and they all remain some way from gaining the scale to achieve profitability

The only incentive for challengers to remain aggressive is as an encouragement for their competitors to buy them; increasing regulatory hurdles to consolidation would remove even this incentive, leaving price increases as their only rational route to profitability

Record growth in 2015 shows Netflix to be well on its way to achieving its goal of 60-90 million US streaming customers, while the latest wave of international expansion suggests Netflix will at least double its global base to over 150 million streaming customers by 2020

Much has been said about the growing SVOD competition from Amazon, Hulu, HBO, Disney and many others, but the simplicity and single-mindedness of the Netflix model is hard to beat, with evidence suggesting it has extended its lead in the toughest of markets, the US

Although growing spend on content origination is putting a strain on the Netflix business, it is critical to long-term success, contributing to the distinctiveness of the Netflix offer and its complementariness with other SVOD services

Netflix gained 1.8 million accounts in the course of 2015 (+37%) to 5.2 million, surpassing the 1.3 million VOD-enabled homes added by fixed line telcos Sky (including NowTV), Virgin Media, BT and TalkTalk. SVOD homes overlap with pay-TV accounts, and are topping up content for family members, not cord-cutting

Amazon Prime Instant Video, bundled into Prime, looks set to balloon from 1.6 million users in Q4 2015 on the back of the marketing of Jeremy Clarkson's motoring show, cementing its position in home entertainment by serving a family-friendly eco-system of devices and media, leveraging its mammoth 25% share of UK e-commerce

Free-to-the-user YouTube remains the heavyweight with 35 million monthly unique users in the UK, although skewing strongly to Millennials, while those 55+ will take longer to move beyond catch-up TV to embrace a wider range of VOD options

UK mobile service revenue growth dipped down in Q4, but at least remained still just positive at 0.3%. The dip was driven by contract ARPU weakness at the largest three operators, mitigated by strong ARPU growth at the smallest operator H3G

Looking forward, the sources of weakness (growth of SIM-only and tariff policy adjustments) look more temporary than the sources of growth (data volume growth filling up capacity). SIM-only is likely to hit a natural ceiling, whereas data volume growth has no ceiling in sight and the scope for network capacity expansion is limited

With CK Hutchison currently negotiating with the European Commission in regards to the fate of the H3G and O2 merger, there is a high level of uncertainty on the future of the structure of the UK mobile market. Merging the two networks would generate extra capacity and capability, likely increasing competitive intensity, but the precise form this would take is unclear, as is the future of the brands and the identity of the capacity MVNO recipient(s)

EE reported solid contract net adds, but weakening contract ARPU, which drove mobile service revenue growth down to -2.5%

However, EBITDA growth was spectacular at 15% in H2, suggesting that much of the subscriber growth is in low revenue high margin segments such as SIM-only and B2B, as well as cost control being strong

EE’s new parent BT is likely to be able to drive further progress in these areas, and the outlook is robust even if quad play demand remains low in the consumer market

European mobile service revenue growth again improved, albeit marginally, with the quarter’s gain driven by declines easing further in what nevertheless remain the three weakest markets: France, Italy and Spain. Generally stabilising pricing environments were a key factor although ARPUs in these markets remain largely in decline, under continued pressure from strong out-of-bundle revenue declines

In a post-consolidation world, H3G/O2 in the UK and Yoigo in Spain will be the only mobile-only MNOs in the top five European mobile markets, effectively cementing a convergence based future. Consolidation trends might point to the prospect of greater price stabilisation but a fresh land grab for the converged market could derail this

Overall, in spite of healthy underlying data trends, we continue to see medium term growth recovery prospects capped at around 1% given precedent from both the UK, where a healthy economy, healthy pricing environment and strong data trends have failed to exceed this level, and Germany, where post-consolidation revenue growth has reverted to negative territory, both due to competition and consolidation

UK mobile service revenue growth remained at 0.9% in Q3, but on an underlying basis growth increased 0.1ppts to 1.4%. This continues a trend of very gradual improvement in underlying growth over the past year, while reported growth has stayed constant at around 1% due to the re-introduction of regulated MTR cuts on 1 May 2015

Within the market, performances were mixed. O2 remains a service revenue growth star performer thanks to strong sustained contract net adds and stable contract ARPU while Vodafone’s service revenue growth fell back into decline as its contract ARPU suffered due to a sharp fall in out-of-bundle revenue. EE’s contract net adds were strong, but its contract ARPU growth remains weak, partly due to its renewed contract net adds performance being supported by low ARPU data devices and B2B

Since the end of the quarter, on 28 October, the CMA provisionally approved the BT/EE acquisition without conditions, and on 30 October, the EC opened an in-depth investigation into H3G/O2. Both acquirers would be wise in our view to be wary of making any rapid changes to branding and/or channel strategy, given that EE and O2 account for nearly 60% of UK gross subscriber additions between them and disrupting these sales will have a significant impact on subscriber growth, as EE’s experience since dropping Orange and T-Mobile has shown

At launch, Google’s new subscription service YouTube Red competes most directly with premium music streaming services, also offering ad-free videos

YouTube’s augmented revenue model re-boots incentives for native talent to produce content for the platform, and will also widen its appeal for established content producers

Although consumers are likely to find paid subscription for ad-free videos a weak proposition, Red holds much potential for YouTube as it competes for attention across device ecosystems, and presents little risk to its existing advertising model