Sky Italia’s latest strategy presentation to investors focuses on a number of positive revenue-generating and cost-cutting initiatives it is taking in the Italian pay-TV market

Sky Italia is taking a disciplined approach to subscriber recruitment and upsell of optional products as it anchors its brand at the upper end of the Italian entertainment market, supported by proactive development of original content, advertising sales and IPTV distribution

Growing product penetration has helped to reduce churn and support ARPU growth, but Sky Italia’s ability to arrest subscriber erosion and return to growth in fiscal 2015 and beyond also depends on the degree to which the economic climate becomes milder, as expected by forecasters

2014 has been a good year for total advertising, which we forecast to grow by 5.5% across the year; display advertising spend is also forecast to grow by over 6% year-on-year. This is largely thanks to a positive economic backdrop, where we have seen a significant rise in consumer expenditure over the last two years

Online advertising spend has been the biggest recipient of growing ad spend, with 20+% growth last year, this year and next. This has mostly been to the detriment of print revenues, where online classified search solutions, amongst other factors like declining circulation, have disrupted print marketplaces

Video has been the largest growth area in internet advertising as online video consumption increases. Up to now online spend has largely been accretive to TV budgets but we are starting to see some advertisers switch to online video spend. However we do not expect TV to suffer in the same way as press

UK mobile service revenue growth stayed positive in Q3 2014, albeit at a slightly lower level than last quarter, an achievement given performance in recent years, but a slight disappointment given the previous improving trend. Pricing trends were a little worrying, but data volumes continue to accelerate markedly

With Phones 4U ceasing to trade towards the end of the quarter, Q4’s subscriber shares will be largely determined by where its prior customers end up. With these representing 13% of market gross adds which implies 65% of net adds, the impact is significant

Merger talks underway with the parents of O2/EE and BT, with H3G reportedly getting involved, will have an impact whether they lead to a deal or not; if either EE or O2 (or both) remain independent within the UK, they will likely need reinvigorating and re-motivating as to their raison d’etre or risk drifting without a clear direction

Market revenue growth in the UK residential communications sector dipped down to 4.5% in Q3, from 5.4% in the previous quarter, but underlying revenue growth actually rose a touch by our estimates. In an intensely competitive quarter, BT lost ground relatively in broadband, with its net adds dropping compared to growth at the others, but BT still had the highest net adds in absolute terms, and continued to lead the way in revenue growth

With BT’s mooted bid for a mobile operator and quad play moves being highlighted by several operators, in this report we re-examine the evidence for consumer demand for quad play and find it still wanting. In the UK since 2001 there have been eight attempts at cross-selling between fixed and mobile, with five outright failures (three of which were from BT), two attempts that lost market share after an acquisition but are now growing modestly, and one attempt which has successfully gained modest share

The UK fixed business has better growth and far better margins than the mobile business. BT alone makes more cashflow in the UK than the entire mobile industry put together – the grass may always seem greener on the other side, but in this case it definitely is greener in fixed. The fixed operators have far more to lose than to gain, and for this reason alone they should perhaps be wary in their approach to quad play

The shift to mobile continues, with the smartphone replacing the laptop as the device with the most users, although the rate of tablet adoption has slowed somewhat.

This shift will change the online revenue mix, with mobile being better suited to content, native and video advertising than traditional display and search. Mobile devices also now account for the majority of visits to retail sites, and more than a third of spend online.

We see large age-based differences across all internet activities, but the split is particularly significant for smartphone adoption and usage, with only a quarter of over-55s using smartphones, and only a third of those reporting downloading apps.

TalkTalk had a solid quarter for net adds, helped by churn being held well under control, with broadband perking up, TV dipping down as pre-warned, and fibre and mobile both significantly accelerating

Revenue and ARPU growth accelerated, although not by as much as might have been expected given the timing of price rises, with the lower priced SimplyBroadband product likely still driving significant ARPU dilution

The company disappointed the financial markets with a warning of higher SACs in H2, and its medium term EBITDA margin target remains challenging, but continued revenue growth and margin expansion are nonetheless likely

Auto is the third category in our annual series of reports on UK classified advertising, following UK classifieds and recruitment category outlook [2014-094] and Property classified advertising [2014-098]. In this year’s report we analyse the key drivers in the communications marketplace for used cars, notably transaction volumes and pricing. Overall the auto market is relatively buoyant, with the post-recession new car sales boom starting to feed into used car revenues in 2014, although the sustainability of this credit fuelled growth is far from certain. Auto Trader remains the big beast in the marketplace after Guardian Media Group sold its 50.1% stake to Apax Partners earlier this year. Apax will likely be considering an IPO or sale, particularly as market conditions look favourable in 2015 and Auto Trader’s strong leadership position looks largely unchallenged.

Property is the second category in our annual series of reports on UK classified advertising, following UK classifieds overview and recruitment outlook [2014-094] and with autos to follow. Our property market report analyses the key drivers in the communications marketplace for UK domestic property, notably transaction rates and house prices, but also substantial developments in government policy. We analyse the estate agent marketplace and drill down into expenditure patterns for property advertising across all media, and provide five year forecasts. We also look at the online property advertising markets in Australia and the USA to gain a broader perspective on potential developments in the UK. Here, the competitive battle between Rightmove and Zoopla continues; estate agents' plans to stem the duopoly’s pricing power with the launch of a new portal in January will struggle to achieve consumer momentum unless there is a huge marketing investment.

Vodafone Europe enjoyed a sharp improvement in mobile service revenue growth in its Q2, with the decline reduced to 5% from 8% the previous quarter

Part of this was due to a reduced regulatory impact, part was due to one-off factors, but underlying improvements are still clear across all major markets, with price declines attenuating and a significant improvement in competitive performance

In the short term the partial stabilisation of pricing is perhaps the result of a fairly fragile equilibrium which could shatter at any time, but Vodafone’s aggressive network investment and surging data volumes give confidence in a sturdier recovery going forward

Virgin Media had its best subscriber net adds for years in Q3, despite slowing market growth and intense competition from the DSL operators

Underlying cable revenue growth also remained solid at around 4.5%, business and mobile continued to perform well, and underlying OCF growth was stable at 6%

As the market moves to high speed broadband, Virgin Media is benefitting above all others, and this long gradual shift is still in its early stages