Although NTL could use ITV programming to improve its competitiveness, it is difficult to see how yet another acquisition could be justified, given the managerial and financial burden that would result. Nevertheless, we believe that NTL will move heaven and earth to acquire ITV and is deeply serious in its intentions

Group revenue growth continues to be positive but vulnerable; EBITDA growth continues apace but cash flow growth has again been hit by 21CN capex

At the end of Q3 2006, the UK had 12.4 million broadband connections and we estimate 45% household broadband penetration. Over the past 12 months, 3.4 million new broadband connections have been sold, generating overall market growth of 38% year-on-year. Quarterly net additions were 719,000, 83,500 higher than the previous quarter, but 178,000 lower than the same quarter last year. We believe that broadband adoption has now peaked, partly due to provisioning issues, and we envisage a gradual decline in the new connection rate over the next 18 months

Under regulatory pressure, France Télécom introduced in July 2006 a wholesale ‘naked’ DSL offer, under which broadband alone is supplied to the customer, as the lower frequency portion of the line used for PSTN telephony is deactivated

In continental Europe ‘public/private partnerships’ rolling out very high speed broadband (VHSB) access networks to consumers are the latest rage, with local governments pushing their own subsidy initiatives and seeking to secure cover from European Commission rules on state aid. These initiatives raise basic questions about the future of the telecommunications industry, including whether the supply of network infrastructure will be led by demand for applications or by the will of politicians, subsidies at hand

Group revenue growth was strong but helped by a one-off price change and LLU supply issues at Openreach

Virgin Media’s Q4 results were again mixed – increasing competition is continuing to have a significant effect on net additions but, as yet, most higher ARPU customers are staying put, permitting modest revenue growth

Iliad’s 2006 results were solid with broadband subscriber growth on target, DSL market share up one point to 19%, ARPU up 7% to €34.5/month and churn (enviably) at just below 1% per month. Over 1 million of Iliad’s subscribers have dropped France Télécom line rental and Iliad now completely owns those fixed-line telecoms customer relationships

UK broadband market growth fell to 3.2 million net additions in 2006 from 3.8 million in 2005. With 47% of UK households already on broadband, new entrant unbundlers (BSkyB and Carphone Warehouse) are racing against the clock of a maturing market to sign up customers

The internet is the UK’s fastest growing advertising medium, with spend rising 41% to £2.02 billion in 2006, and a further 30% rise expected for 2007. Three drivers underpin this growth: more intense use of the internet as broadband connections become standard, very strong growth in e-commerce, which is driving up paid-for search, and improving yields through rich-media formats. These factors will continue to propel growth of internet ad spend in the near future