BT hit its FY25 guidance of a modest revenue decline coupled with modest EBITDA growth, and expects more of the same in FY26.

The highlight of the results was consumer broadband returning to subscriber growth despite the altnet onslaught; the lowlight was an increasing decline in Openreach broadband subscribers thanks to other Openreach customers (e.g. TalkTalk) not doing so well.

BT’s longer-term outlook and prospects for a dramatic cashflow turnaround remain strong, with Openreach net losses much more likely to improve than worsen over the next year, and further steps taken to divest/isolate erratic non-UK business segments.
 

Germany suffered a sizeable EBITDA decline in the 2H of FY25, and guidance for European EBITDA next year implies another tough year in FY26 with an underlying 5% decline for Europe as a whole excluding 1&1.

Elsewhere, the UK had a very solid FY25 and is a good news story for the Group with the merger with Three in prospect, but the Rest of World’s contribution is likely to diminish from here.

Various one-offs will support the outlook for next year, but operational execution is at the core of Vodafone’s raison d’être. Beyond some encouraging KPIs, investors continue to await meaningful evidence of such.

US tariffs and regulations are sparing no one in 2025—Microsoft, the ‘winner’ of the earnings quarter, is still making plans to protect its European business in a doomsday scenario.

Hyperscalers who have piled their eggs into cloud cannot afford a misstep—this is driving record capex to satisfy cloud demand. We expect to see lumpiness in Q2-Q3, feeding investors’ worries.

Revenue impacts have been felt first at US retail, softening ad demand, with the UK relatively protected for now. Despite relief at the 90-day ‘reset’ with China, economic and political uncertainty remains the story of the year.

The slowdown in telecoms traffic volume growth post-pandemic has persisted for far longer than a simple hangover effect would imply, and has spread from fixed broadband to mobile in many markets

The eventual emergence of the metaverse and/or AI-generated traffic may mitigate this trend, but it is hard to see growth ever returning to a sustained 30%+ per annum level, with around 10-15% likely to prove the new normal

While far from disastrous for telcos, it does have important implications, such as the need to structure pricing more carefully, focus on network quality over capacity, and be more wary of the threat (or opportunity) from MVNOs, FWA and satellite

VMO2 reported solid financials in Q1, with revenue and EBITDA growth both improving and both (just) ahead of full year guidance.

Subscriber momentum however was poor across fixed and mobile, despite customer service improving, with broadband in particular likely to get worse as network buildout slows.

Meeting full year guidance is still achievable, but will likely require a significant altnet slowdown sooner rather than later in the year.

Most regulations within the TAR26 condoc were continuations of the previous pro-investment regulations, albeit with little progress made on copper withdrawal, no extra help for the struggling altnets and a number of unexpected twists at the margin. 

Within the detail, the most significant hit is the return of cost-based price controls to some leased line charges, and across all of the proposed changes, Openreach has on balance fared worse than retail ISPs, albeit at a scale that is manageable within the BT Group.

Ofcom showed no inclination to offer any extra help to the struggling altnet industry, regarding its inefficiencies as being its own (and its investors’) problem, with consolidation the only sensible path forward for most.

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Trump II is already proving to be a more serious threat to an independent, robust news media than Trump I.

Trump’s direct power around news media is limited, but the threat comes from an unprecedented politicisation of federal regulators, enforcement and procurement—to favour friends and punish enemies.

Opposition to Trump II is weaker and more divided than the broad ‘resistance’ to Trump I. Big tech companies are going for a close embrace, hoping to steer policy to their advantage—while others bend the knee to avoid punishment.

Geopolitical clashes between the US and Europe were a barely concealed undercurrent at this year’s MWC, with European tech regulation at odds with US moves, and telcos pitching for regulatory favours on firmer ground than they have had for years.

Perhaps the largest impact is on the satellite industry, with Eutelsat OneWeb having been given a new lease of life as the EU champion versus a now disfavoured SpaceX/Starlink.

AI was of course the talk of the town, but largely in ways that are tangential at best to traditional telcos, with the necessary building blocks for telcos to play a big role (i.e. network APIs) still needing much work.

The ‘big 4’ ISPs’ combined revenue remained in decline in Q4 2024 at -0.4%, partly due to a BT accounting quirk but mainly due to altnets gaining share

ARPU growth of 2% is roughly compensating for subscriber declines of 2%, but this ARPU growth is likely to weaken in 2025 as various boosts drop out

A recovery will come as the altnets slow in H2 2025 (if not before) due to their restrained expansion, which cannot come soon enough for the big ISPs

US big tech companies are deploying hundreds of billions of dollars to remake the global economy in their image, as enviable growth contrasts with layoffs and low morale.

The cost of using AI models will fall in 2025 and make more AI applications possible. Regulation is caught between pressure from Trump and investigations that must go on, such as digital markets.

Microsoft and Google have tied their fortunes to AI. Amazon and Meta stand to realise business gains from AI, while Apple is the outlier: capex declined in 2024 as it focuses on iPhone and services.