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Lockdown 1.0 in March-April-May 2020 reduced mobility in London to 65% of its pre-pandemic baseline, swelling time spent at home. London’s mobility tracked a similar decline to Paris and New York City, all hugely reliant on public transport

Easing lockdowns and good weather slowly led to a mobility recovery through the summer and early autumn, but it sharply declined again after November’s Lockdown 2.0. The mobility decline was greatest in the City of London, which is more acutely affected by working from home

Each nation in the UK diverged slightly from September due to varying local policies adopted by England, Wales and Scotland to address their public health crises. Notably however, Lockdown 2.0 did not cause mobility to fall to the same degree as late March

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Mobile growth improved very marginally to -3.6% this quarter as roaming revenues were harder hit and competitive intensity bounced back, but usage recovered from the lockdowns in Q2 and cuts to intra-EU calls were annualised.

Italy’s fortunes took a turn for the worse as roaming hit particularly hard and Iliad resurged. After a spate of downgrades to the outlook last quarter, there were some tentative upgrades in Q3 although the tone remains cautious.

The diminished drag from roaming is the primary positive driver from here. Although lockdowns of some degree are in place in Q4, their impact will be less severe than those in Q2.

 

Service revenue declines stabilised at -7% this quarter with a myriad of factors at play: roaming worsening, the end of lockdown taking some pressure off, B2B a mixed bag, and the annualisation of cuts to intra-EU calls.

Ofcom’s second 5G auction will be a focus in January. We expect selective bidding, proceeds of up to £2.7bn, and some wrangling over spectrum trading.

The outlook is better from here as the drag from roaming eases, in-contract price rises step up from the spring, Carphone Warehouse diminishes as a factor in the market, and the prospect of consolidation is still on the table.

By integrating Amazon's content, Sky tightens up its ecosystem. We now estimate that no more than 5% of Sky users have subscriptions to services that are not carried by Sky Q, excluding Now TV

The agreement may be a first step in closer co-operation, but Sky will be cautious to value the benefits and costs. Amazon's width of business makes it different from others it has made deals with

Sky is on its way to transform the relationship it has with content suppliers from a relatively simple wholesale model to something it now calls aggregation: this appears intrinsically more complex

Market revenue growth improved to -2%, after the sport-affected -6% last quarter, but was still low by historic standards.

Backbook pricing pressure is still hitting the market, and this will not improve until 2021 at the earliest.

Demand however looks strong; broadband adoption has re-accelerated, and the early signs of ultrafast adoption are encouraging.

Virgin Media’s lockdown subscriber surge continued into Q3, as working-from-home highlights the importance of the faster speeds its network can offer.

ARPU is more challenged, and will get worse next quarter given its forgone price rise, but price rises are back in fashion in the industry, so this problem is likely to prove temporary.

Openreach’s full fibre remains a medium-term threat, but the company is rightly taking advantage while its network superiority remains, with momentum firmly in its favour for now.

The launch of new games consoles this week showcases broadly divergent strategies for Sony and Microsoft, with market leader PlayStation focused solely on defending its model against the rising tide of cheaper subscription games services.

Xbox's consumer offer is the best value proposition for these difficult economic times, attracting new customers and positioning for growth, and stopping slavish devotion to 'core gamers' in the process.

Amazon's Luna lands, providing big competition in game streaming services for Google's Stadia. But nobody is taking any notice, as neither provide a real breakthrough for the industry or great value for gamers. Stadia’s lifespan could be limited.

BT’s revenue growth remained very suppressed in the September quarter at -7%, with a limited COVID-19 recovery chocked off by seasonal roaming effects and regulator-inspired pricing forbearance.

EBITDA growth did improve to -3% from -7% last quarter, mainly due to short-term cost actions and the early impact of its longer-term cost program, and the company has upgraded its short- and longer-term EBITDA targets.

The company is also optimistic on a longer-term return to underlying revenue growth, helped by a return to regular existing customer price increases and the impact of full fibre, but not until 2023, with a few bumps in the road before then.

GDP growth slowed in August (+2.1%) from July (+6.4%), despite the boost to the hospitality sector from Eat Out to Help Out, while work from home (WFH) guidance remained in place for professional services.

WFH is providing resilience to B2B service verticals, thanks to the UK’s digital capabilities, while decimating B2C businesses, whose resilience is threatened as loan and furlough support programmes wind down. Rising unemployment casts a pall over consumer demand in the first winter of the pandemic.

Online continues to power retail sales, as consumers replace out-of-home with in-home activities. Online grocery sales have leapt to 10% of all grocery sales—double the pre-pandemic levels.

With a lack of live sport, the lockdown weighed on incumbent pay-TV platforms’ subscriptions. SVOD providers leveraged their cheap positioning—Netflix and Amazon Prime Video now rank above other subscription services in Europe, and Disney+ had a successful launch.

Incumbents—Sky, Canal+, Movistar+—all pursue a twin-track strategy. They are positioning themselves as gatekeepers thanks to service bundles, while redirecting resources away from sports towards original series.

European productions are increasingly garnering audiences outside of their home markets, regardless of the production language. Netflix is a major conduit for European exports, due to personalisation of the interface and high-quality dubbing.