The two-part nature of the UK 5G auctions has thrown up various issues, with non-contiguous spectrum blocks proving the most challenging to resolve.
The Annual Licence Fees (ALFs) attached to H3G’s spectrum are the crucial stumbling block in spectrum trading negotiations, creating a level of uncertainty which is not conducive to striking a sensible deal.
Ofcom has a crucial role to play in securing an efficient outcome and time is very much of the essence.
The bounceback from COVID is yet to be evidenced in UK mobile as there was no improvement in service revenue trends this quarter beyond the simple annualisation of the pandemic hit.
More mobility and international travel will be crucial tailwinds. Q3 travel rates are only slightly higher than a year ago, limiting the near-term upside. Some pandemic boosts such as lower churn and higher B2B demand will also unwind somewhat.
Spring 2022 looks set to be a turning point for the sector with price increases of 6-7% in the offing on the basis of recent inflation rates, and the potential for renewed roaming revenues, even from Europe.
Epic Games, maker of mega-hit Fortnite, sued Apple over alleged antitrust violations around App Store rules and Apple’s 30% tax on in-app transactions. A decision could come soon, though it will be contested on appeal.
The implications of the case could be far-reaching, as Apple and other tech companies like Google design their platforms to extract high-margin revenue from the transactions they facilitate, including news subscriptions: a five-year basic in-app subscription to The Times costs £885, of which Apple takes £158.
It comes in the context of a flurry of debate and decisions around tech antitrust and consumer protection: new laws may ultimately be needed, but regulators in the US and UK are proving they can be creative with their existing tools.
As we expected, UK mobile operators are beginning to introduce EU roaming tariffs, with EE taking the first major leap in the hope that others will follow.
This move is somewhat inevitable as current arrangements leave operators exposed to up to €75 of monthly wholesale charges.
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.
The last lockdown caused service revenues to dip again to -7% in spite of some easing of roaming pressure and the annualisation of some early pandemic weakness.
The heralded, elevated in-contract price rises will fail to drive higher growth this year due to lower inflation—we estimate zero impact at BT/EE relative to 2020 and a reduction in revenue momentum of around 0.5ppts for each of the other operators.
The annualisation of the first lockdown is the most meaningful upside from here with a boost of around 5-7ppts possible. However, some pandemic upsides will also unwind, notably lower churn and enhanced B2B demand with the latter vulnerable to the end of furlough support and the economy.
The press industry lost £1 billion off the topline from the calamitous decline in print revenues due to pandemic-related mobility restrictions, partly offset by gains on digital subscriptions, much harder to precisely size in revenue terms.
Trapped at home for the most part, online traffic to BBC News and news publisher services boomed. Popular news sites marginally grew digital advertising while the quality nationals attracted 800,000 new paying subscribers to reach nearly three million in 2020.
The outlook for 2021, in the transition to the ‘new normal’, is mixed. Consumer work patterns and news, information and entertainment habits are unlikely to ‘bounce back’ to pre-pandemic levels, placing free commuter titles at particular risk. Signs of confidence through online innovation are welcome.
The press industry lost £1 billion off the topline from the calamitous decline in print revenues due to pandemic-related mobility restrictions, partly offset by gains on digital subscriptions, much harder to precisely size in revenue terms.
Trapped at home for the most part, online traffic to BBC News and news publisher services boomed. Popular news sites marginally grew digital advertising while the quality nationals attracted 800,000 new paying subscribers to reach nearly three million in 2020.
The outlook for 2021, in the transition to the ‘new normal’, is mixed. Consumer work patterns and news, information and entertainment habits are unlikely to ‘bounce back’ to pre-pandemic levels, placing free commuter titles at particular risk. Signs of confidence through online innovation are welcome.
Spectrum auction assignment stages are normally fairly dull and routine, but due to the two-part nature of the 5G auctions, and the critical importance of proximity and contiguity, this is not the case with 5G.
The assignments won, combined with the Vodafone/O2 deal, ensures that all the operators enjoy at least 80MHz of (essential) proximity, but only O2 gets (nice-to-have) contiguity.
Further swaps could ensure contiguity for all, but this requires H3G to co-operate, which is in its absolute, but not relative, best interests.
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.
The Telegraph’s carefully executed outsourcing of print advertising sales to Mail Metro Media fine-tunes its subscriber-first strategy.
Consolidation and collaboration are inevitable in a highly-competitive, structurally-shrinking news industry.
Reader-first models have emerged as the consistent theme for quality publishers, but the trade-offs, investment approaches and executions are highly differentiated.