BT Group’s revenue growth surged in Q1 to 1%, the first time it has been positive in five years, with a stronger than expected boost from the April price rises partially offset by the Virgin Mobile MVNO loss.

EBITDA growth, however, actually dipped to 2%, with little operating leverage due to cost pressures, although the company is still very confident in its full year EBITDA guidance (which implies 4% growth).

BT is far from immune to macroeconomic pressures, with pressure on costs, corporate revenue and signs of a sharp dip in broadband market growth, but it is well placed to deal with them given strong growth at Consumer and Openreach.

UK altnet full fibre rollouts are accelerating, with an aggregate build pace close to that of Openreach, but customer acquisition is not growing at the same pace, and overbuild in the most attractive areas is becoming a significant issue.

Altnet business models remain challenging and are getting worse as Openreach builds out, and (although there are some notable exceptions) most will need to rapidly achieve scale and turn around their performance to survive.

Consolidation is very likely, along with business failures, and while some market share loss for Openreach looks likely as serious scale players emerge, the downside is limited, and even more so for retail ISPs.

Press reports suggest that VMO2 is in the early stages of negotiating a deal to buy TalkTalk, which has reportedly been for sale since April.

There is strong industrial logic to the deal, with a sub-brand useful and significant synergies from moving the TalkTalk base to VMO2’s network, with the latter gain at Openreach’s expense.

The main hurdle for the deal would be regulatory clearance, with there being major issues for the CMA—from a range of angles—for such a large in-market merger.

With 54 million daily active users, half of whom are under the age of 13, online games hub Roblox is much more popular than Fortnite, and still growing rapidly even on top of a sizeable pandemic boost

Roblox is a window into metaverse-like value exchange. The platform pays out about $150 million to developers each quarter through its thriving real-world economy without calling on blockchain―the company must avoid the distraction of NFTs as it attracts more brands

Roblox's success suggests that platforms will remain at the heart of virtual worlds; Roblox itself is a (relatively laissez-faire) gatekeeper, though subject to app store rules in an ongoing financial and policy headache

With the cost-of-living crisis expected to worsen over the coming months, the telecoms operators must walk a fine line—support customers but protect their financial performance in the face of a likely recession and rising costs.

We are likely to see weakness on the B2B side and consumers will look for ways to reduce out-of-bundle spend, seek retention discounts and spin down to lower speed tiers and data bundles, but we expect that dropping services completely will hold limited appeal.

Proactive retention activity and promotional pricing is likely to pay off more than slashing headline prices, and will help to avoid a damaging price war—a far bigger risk to their revenues than spin-down.

The cost-of-living crisis facing the UK economy notched up a gear in April, with a shock 9% CPI reading due to the home energy price cap increase; the May reading of 9.1% implies ongoing real income declines. The World Bank warns of the largest commodity shock in 50 years as a result of Russia’s invasion of Ukraine—with prices to remain elevated for 2-3 years

After the pandemic widened social inequality between B2B workers able to accumulate savings through work from home (WFH) and B2C workers who had to continue commuting, the home energy and petrol price crisis is again disproportionately impacting low-income households that cannot WFH

While the UK could find itself in a mild technical recession in Q2 and Q3 2022, base effects from the lockdowns in the first half of 2021 are certain to produce a higher annual level of GDP for 2022, with the OECD forecasting 3.6% growth, although it also predicts GDP will stagnate in 2023, with significant risks to the downside from further energy supply disruptions

This report is free to access.

The Protocol on Ireland/Northern Ireland has been a thorn in the side of relations between the UK and the European Union (EU) since the ink was barely dry. It seeks to uphold the Belfast Good Friday Agreement concluded in 1998, which established power-sharing between unionists and nationalists, but this has collapsed since February 2022, because the unionists, supported by the UK Government, oppose Northern Ireland being carved out from the UK Internal Market

By doing so, the Protocol removes any requirement for customs formalities for goods crossing the land border between Northern Ireland and the Republic of Ireland. The Protocol led to a customs border in the Irish Sea for 'exports' from Great Britain to Northern Ireland, and also requires Parliament to legislate the EU Single Market for goods in Northern Ireland and to carve out the territory from otherwise applicable UK legislation

UK divergence from the rules of the EU Single Market will threaten Northern Ireland’s position in UK supply chains and also potentially undermine the EU Single Market, which is of concern to the EU, especially for matters of human health, such as “genetically modified organisms” (GMOs). This report concludes that a revised agreement should be attached to the EU/UK Trade and Cooperation Agreement (TCA), which then applies to all of the UK

The market looked superficially healthy in Q1, with revenue and broadband volume growth both maintained at 2%.

However, net adds trends suggest that consumers are becoming more bargain seeking, and prices have become more competitive into Q2.

The April price increases will support growth in the short term, but this boost may not last long if the cost-of-living crisis persists.

On 12 May 2022, Enders Analysis co-hosted the annual Media and Telecoms 2022 & Beyond conference with Deloitte, sponsored by Barclays, Financial Times, Meta, and Deloitte Legal

With up to 500 attendees and over 40 speakers from the TMT sectors, including leading executives, policy leaders, and industry experts, the conference focused on regulation, infrastructure, and how new technologies will impact the future of the sector 

These are edited transcripts of Sessions 7 and 8 covering: UK mobile and the opportunities and challenges of infrastructure. Videos of the presentations are also available on the conference website

BT’s Q4 was mixed in the detail, with consumer broadband volumes weakening but FTTP roll-out and adoption surging, with performance at the Group level solid enough.

The April price increase has reportedly landed well, strongly supporting BT’s guidance for revenue and EBITDA growth in 2022/23 with no other improvements required.

The macroeconomic environment continues to weaken, affecting BT and its premium brands in a number of ways, but it appears to have enough room in its guidance to weather this storm.