Virgin Media’s Q4 results were strong across all measures, with household, RGU and all product net adds accelerating, revenue accelerating, and OCF growth
As demand for high speed broadband grows, Virgin Media is benefiting by offering the fastest top speeds and by being the cheapest provider for speeds over 30Mbps
The company has announced a £3bn investment to extend its network by 4m premises, which may win it an extra 6% share of the broadband market at the expense of BT, Sky and TalkTalk
The latest auction of live televised Premier League rights has exceeded all expectations as the next three-year package commencing with the 2016/17 football season will cost £5,136 million, 70% up on the current £3,018 million
By shouldering much the greater cost increase of 83%, Sky has held on to five out of seven packages, including the most prized Super Sunday; however, the latest auction results underline the continuing core importance of PL football in spite of all the recent multi-product diversification and investment in non-sport content
Though still the smaller of the two parties with just two packages, there is much to satisfy BT in the results. Its cost increase was an easily-affordable 30%, which will make Ofcom's VULA test more manageable given upcoming European Champions League payments. At the same time, the pressure on Sky's profitability has increased
The iPhone 6 and 6 Plus drove Apple’s most extraordinary quarter ever, with the company’s position in the smartphone market improving on all fronts: explosive growth in China, rising market share in the US and a rising average sales price.
By contrast, iPad sales continued to decline in spite of the iPad Air 2’s release, suffering from cannibalisation by the phablet-sized 6 Plus and saturation in developed markets. Apple has a strategy to revive sales, which may bear fruit later in the year.
A slate of new products is coming this year, led in the spring by Apple Watch. The question is, will Watch be a significant new source of profit or just a way to protect the iPhone’s dominant position in the smartphone market.
Sky plc, the coming together of BSkyB, Sky Deutschland and Sky Italia, has enjoyed an excellent start, as adjusted H1 2015 figures delivered a 5% increase in revenues versus a 3% increase in costs, resulting in EBITDA growth of 7% and with free cash flow up by 25%
The strong financial results were accompanied by strong subscriber growth figures, especially in the operations covering Austria, Germany, Ireland and the UK, while all markets showed large reductions in churn, reinforcing confidence in the strategic approach of Sky plc
It is too early to assess Sky’s delivery of its target group synergies. Individually, the former BSkyB and Sky Deutschland markets may be showing much stronger subscriber and product growth, but they also look to be more exposed to risk over football rights, while Sky Italia has more going for it than may appear at first sight
Vodafone Europe’s service revenue growth continued to recover into its Q3, with the growth of -2.7% a further improvement of over 2ppts
This was largely driven by improved subscriber numbers, with contract ARPU in general still falling, although in the UK it notably returned to growth, with the pending consolidation bringing both threats and opportunities
Vodafone’s Project Spring investment appears to be bringing benefits before it is even halfway complete, boding well for its future impact
TalkTalk’s revenue growth accelerated to over 4% in Q3, despite a tough comparative, with a price increase towards the end of the quarter and robust corporate revenue growth helping, giving it good momentum into 2015
Broadband net adds of 15k were unchanged on the previous quarter, disappointing given a broader market bounce, but the company expects acceleration next quarter
The company warned of lower than expected EBITDA margin in H2 2014/15, making its medium term 25% target look more challenging, but margins are still likely to improve going forward
This Digital UK 2015 report is a collaborative effort by research partners Enders Analysis and EY. Encapsulating materials in the public domain and proprietary to the partners, it sets out to demonstrate the vibrancy of the UK’s digital economy and its potential for growth.
Key UK strengths include:
The UK’s world-class digital infrastructure and its vast pool of smart connected consumers are unique strengths, and could be converted to leadership on the digital business models of the future. However, as important as the tech industry is to the future of the UK, the UK’s many existing businesses in other sectors could also aspire to be ‘fit for the digital age’. This will not only drive value for UK businesses, but if pursued energetically, it will help resolve the UK’s productivity puzzle.
The report is free to download on the event website http://www.digital-uk.london/
BT Group revenue growth dropped to -1%, but entirely due to one-off factors, with its consumer division accelerating underlying growth and roughly maintaining broadband net adds share
Fibre net adds had a record quarter, driven by growth at Sky/TalkTalk et al, and BT is trialing the next generation of high speed broadband which could sustain profitable wholesale revenue growth for years to come
Upcoming developments over consolidation, quad play and sport rights are likely to continue to dominate the headlines, but it is growing capacity demand and BT’s ability to meet this that will drive BT’s long term value
Ofcom anticipates opposing the use of core DTT spectrum for mobile broadband at WRC-15 in November in recognition of the importance of broadcasting
Assuming the aligned UK and wider European position prevails at WRC-15, DTT spectrum will be exclusive to broadcast until 2030, providing certainty for broadcasters and programme makers to enable ongoing investment in the platform
However, there will be continued pushback from the mobile network operators to expand the spectrum made available to mobile broadband earlier, and broadcast will need to remain as vibrant and competitive as it is today
Customer movement between operators shows susceptibility to dynamism in branding; O2 are picking up the majority of EE churners as customers move to the new “cool brand” while EE pull in Vodafone churners tempted by the new “best network”. O2 have the lowest churn though the lion’s share move to Vodafone and H3G churners are more evenly picked up by the other three
Customer perceptions of own operator network quality are high among the big 3 with no less than 75% of customers reporting theirs is the best network. O2 is the best regarded while H3G is the least best regarded highlighting a stark contrast between the (prospective) merging parties
Consumers report little interest in quad play and indeed operators in the both fixed and mobile markets have publicly confirmed the same from other market research. However the arrival of converged players in the form of a merged BT/EE or Vodafone re-entering the fixed space will see operators seeking to change this