The sector rebounded slightly in the quarter to December thanks to a seasonal improvement in the roaming drag, although the partial lockdown tempered the recovery.

We await imminent news on spectrum trading, and there may also be some licence fee reductions as a consequence of the lower prices in the recent 5G auction.

While the sector is likely to continue to struggle into Q1, the outlook is much brighter thereafter thanks to the annualisation and even reversal of some lockdown effects, and to higher price increases from the spring.

Despite relying on a narrow IP base, US content production is booming, overwhelming other markets and seeking alternative distribution to cinema.

Responding to the rise of Netflix and Amazon Prime, studios seek to shift distribution from wholesale to retail—but only Disney may succeed.

Most content is likely to remain accessed by consumers through bundles. Provided they engage with aggregation, European broadcasters can adjust to the new studio model.

Ofcom’s second 5G auction concluded with proceeds half those of historic levels for a number of reasons.

The outcome is positive for all operators with no major surprises. The results imply a much more level playing field for the UK mobile operators than in the past.

A relief for the operators but proceeds for the exchequer will be disappointing, and ALF renegotiation may reduce their revenue steam further.

The wave of deal-making in the European towers sector is driven by cash-strapped telcos seeking a form of sale and leaseback financing.

While the operators are incentivised to provide a medium-term growth trajectory for these towers companies, sustainability of that growth is more questionable, especially as 5G will not require additional base stations.

Cellnex continues to insinuate itself into the UK market with its most recent deal signaling the ultimate unwinding of the MBNL JV. Further UK towers consolidation seems a long way off but could facilitate, or indeed be facilitated by, consolidation at the MNO level.

The value of certain sports rights can be appraised through three major metrics: the ability to command viewing/engagement, the ability to drive subscriptions incremental to other rights, and the propensity of those subscribers to provide the rights holder with additional revenues.

In this report we examine these three metrics in order to gain an understanding of the tensions in the market, along with the reasons as to why there is competition (or not) for certain rights.

Unsurprisingly, outside of a few primary sports rights, there are an abundance of secondary rights which find it difficult to display their value over others. Their value relies just as heavily on whether rights holders are committing to, or retreating from, major rights.

UK mobile operators seem set to offer EU roaming on selected bundles only—a welcome new form of price differentiation.

This move is economically efficient and particularly helpful for MVNOs for whom the erstwhile arrangements were particularly punitive.

We don't envisage a return to the days of super-normal returns from roaming, but it is nonetheless conducive to much-needed price inflation in the sector.

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.

COVID, potential consolidation, implications for ALF pricing and non-contiguous blocks have conspired to make the forthcoming second 5G spectrum auction a highly complicated affair.

H3G seems unlikely to bid in a meaningful way for the 5G spectrum (3.6GHz+) but is expected to share the 700MHz band with EE. With the three leading operators likely to split the 3.6GHz+ spectrum between them, proceeds of £1bn-£2.7bn are conceivable.

The non-contiguous nature of the spectrum blocks on offer risks the operators ending up with fragmented holdings in spite of Ofcom’s endeavours to encourage trading—an efficiency loss of up to 20%.

There are some reasons to be cheerful about Vodafone right now—small nuggets of encouragement in its H1 results and the prospect of some market repair in the UK. Annual in-contract price rises of CPI + 3.9% across the UK mobile sector could provide very valuable support.

German fixed momentum is a low-light of its H1 results with growth of just 0.6% in spite of heightened broadband demand and in contrast to the 5% growth rate of the Liberty Global assets at time of acquisition.

The IPO of Vodafone’s towers business remains imperative to maintaining its leverage targets and dividend. We estimate that it will need to sell at least 30% of equity and realise a hefty multiple in challenging market conditions.

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.