Publications
Sector(s) |
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Telecoms sector returns: Money’s too tight to mention Mobile sector returns are low, particularly for smaller-scale operators, with H3G earning less than its cost of capital. Regulatory initiatives, spectrum auctions and 5G look set to worsen this picture as H3G strives to gain viable scale Back-book pricing is crucial to the returns of fixed challengers. Regulatory intervention is likely to lead to a waterbed effect in the fixed sector and exacerbate challenges in mobile New entrant business case in full fibre is limited to de facto monopoly opportunities. There is the potential for BT’s returns to increase markedly if it gets full fibre right but new entrants’ inferior economics are unlikely to offer sufficient investor appeal
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Telecoms | 18 October 2019 |
Women's sport: inching towards the media mainstream Media coverage of women’s sport escalated this summer thanks to the 2019 FIFA Women’s World Cup, which ignited national interest. The Lionesses attracted an exceptional peak TV audience of 11.8 million for England’s semi-final match against the USA Still, coverage of women's sport remains minimal outside of major events: only 4% of printed sports articles reference female athletes. Quality press are leading the way—the launch of Telegraph Women’s Sport being the prime example—but the popular press are yet to follow Freely-accessible coverage will generate greater interest and audiences for women’s sport, but continuous investment from all media will be needed to fulfil its potential
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Internet, Media, TV, UK Media | 7 October 2019 |
BVOD advertising: on-demand in demand Broadcaster video on demand (BVOD) advertising is in demand with an £89m rise in 2018 spend to £391m, and is predicted to double within the next six years The rise of on-demand viewing has created a scaled advertising proposition with a strong 16-34 profile – a relief for both broadcasters and advertisers, given the long-term decline in linear TV impacts for younger audiences Big challenges remain: linear TV ad loads look excessive in on-demand, BVOD CPTs can be off-puttingly high, and measurement is still unresolved. BVOD is a welcome bright spot which faces online video competition head-on, but it won’t be able to turn broadcasters’ fortunes around alone
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Media, Telecoms, TV, UK Media | 4 October 2019 |
Time to liberalise UK TV advertising minutage The UK TV advertising market, in decline since mid-2016, could benefit from a liberalisation of advertising minutage if Ofcom reviews COSTA and decides to make changes Broadcasters could gain from the flexibility to devote up to 20% of peaktime minutes to advertising under the EU’s revised Audiovisual Media Services Directive (AVMSD) Ofcom could also level the playing field between PSB and non-PSB channels, although more minutes of advertising on TV is unlikely to inverse the medium’s decline
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Media, Telecoms, TV, UK Media | 24 September 2019 |
Amazon’s pivot to Marketplace Amazon, the gatekeeper to 100 million Prime members, is increasingly reliant for growth on Marketplace, where third-party sellers compete with first-party products Amazon’s multi-channel platform strategy delivers choice and low prices to customers, but third-party sellers have increasingly complained that their playing field is not level After Amazon’s seller agreements were modified in August to implement a competition ruling in Germany, the European Commission is now investigating the data layer
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Non-UK Media, Media | 16 September 2019 |
Cut-price iPhones: Apple's innovative approach Apple’s iPhone launch event was relatively light on iPhone, which shared the stage with games, TV, Watch, iPad and retail announcements This reflects Apple’s developing priorities: as iPhone sales soften, it needs to find new ways to extract value from the wealthy user base it has spent a decade nurturing Apple has embraced this new strategy, offering a range of cheaper points of entry into its ecosystem, making the lost profits back on accessories or content subscriptions
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Internet, Media, Mobile, Technology, Telecoms | 13 September 2019 |
No real let-up: European mobile in Q2 2019 European mobile revenue trends are not yet improving. Italy is still flat-lining at almost -10%, Spain worsened again, and the UK deteriorated sharply. France is the only good news story 5G rollouts seem somewhat tentative. Indications from the UK that it is leading to a more competitive environment may discourage European operators from exacerbating already challenging markets Prior year comparables for Southern Europe will be more flattering in the second half of this year although a doubling in the drag from intra EU calls will dampen any recovery
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Telecoms | 12 September 2019 |
Spotify's podcast play Spotify is investing heavily in podcasting through acquisitions, original content and product innovation It is under pressure to reduce dependence on record labels, whose power makes generating large profit margins difficult. Podcasts promise a non-music content genre where Spotify can capture more value Secondary benefits abound: Spotify can take an active and lucrative role in modernising online audio advertising, it can solve the podcast discovery problem, and engagement across more forms of audio will improve retention
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Internet, Media, Music and Radio, Technology | 11 September 2019 |
Reality bites, and will bite some more: UK mobile market Q2 2019 The UK mobile market suffered its worst performance in five years this quarter with Vodafone alone, somewhat inexplicably, bucking the trend 5G capacity is impacting pricing trends with SIM only packages flattening and unlimited packages increasing in popularity and complexity As the operators invest in solving rural coverage and rolling out 5G, they will continue to be hit by regulation. Out of contract notifications and discounts are next in a long series of assaults
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Telecoms | 4 September 2019 |
Under pressure, how TV is changing on the screen Analysis of peak time TV programming on the main five PSB channels from 2002 to today shows a decline in the number of UK dramas broadcast—predominantly due to a contraction by ITV—though this has steadied since 2010 The resolve of the PSBs to maintain the number of dramas broadcast, despite rising costs, will mean an inevitable increase in the number of repeats and cheaper programming A number of other observations are eye-catching: a greater turnover of drama series, entertainment formats failing at a higher rate and celebrity being treated as a panacea
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Media, TV | 2 September 2019 |
Brexit's effect on TV ad revenue 2019 We have revised our 2019 TV advertising forecasts down to -5% year-on-year due to the prospect of Brexit on 31 October, without an agreement and transition period of continued free trade to the next trading regime with the EU, thus implying the interruption of the free flow of goods across the UK's borders with Ireland, France and the EU generally. With the UK economy already grinding to a standstill, forward guidance for Q3 2019 indicates further decline, and the prospect of a hard Brexit will make advertisers even less willing to commit TV budgets in November and December. As a result we forecast TV advertising to be down 6.7% in H2 2019. Understandably, no official and reliable economic forecast for no-deal Brexit is in the public domain, so we are not yet in a position to forecast TV advertising revenue for next year. |
Media, Telecoms | 21 August 2019 |
What Amazon and Uber can learn from Chinese food delivery apps In China, Alibaba and Tencent compete for food delivery to expand access to a fast-growing source of mobile user data, using their chat and wallet super apps to funnel customers to their food delivery apps In the West, the rivalry is direct between the food delivery apps – Just Eat, Uber Eats, and Deliveroo – and the costs of last-mile delivery dissuade challengers In the UK, Amazon will change the game if it succeeds in its proposed purchase of a minority stake in Deliveroo, which Uber failed to buy last year. Progress on the merger of Amazon and Deliveroo is suspended by the regulator
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Internet, Media, Technology | 19 August 2019 |
UK broadband, telephony and pay TV trends Q2 2019: Pressure still on Market revenue growth bounced back to all of 1% in Q2 after near zero in the previous quarter, with broadband volumes at a near standstill Operators appear resigned to this however, with new customer pricing appearing to recover, and wholesale price cuts not to be repeated On the downside, further regulatory and commercial pressure on existing customer pricing is likely, and pricing détentes are often short lived
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Telecoms | 16 August 2019 |
Virgin Media: subscribers fall but ARPU grows Virgin Media’s results were quite mixed, with the subscriber base shrinking in a very slow market, but ARPU and revenue returning to growth despite pricing pressure and regulatory drags The outlook remains challenging, but market pricing does seem to be easing with no repeat of the damaging Openreach price cuts on the horizon ‘Full fibre’ roll-outs will bring further challenges, but opportunities as well, with the accompanying focus on higher speeds likely to be a significant operational upside in the short to medium term
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Media, Telecoms | 15 August 2019 |
BT: Temporary problems, long term promise BT’s divisions had contrasting fortunes in Q1 2019/20, with Consumer revenue growth sharply turning negative but Openreach external revenue growth accelerating to 10%, leaving the Group level unchanged at -1% and EBITDA on course to meet guidance. Consumer was hit by several regulatory and pricing factors mainly affecting mobile, and the short-term outlook remains tough, with a number of legacy pricing issues across fixed and mobile still to be resolved. Openreach is reaping the benefit of previous price declines annualizing out, allowing it to take full advantage of higher speed demand, and due to its full fibre roll-out this dynamic could persevere for years.
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Media, Telecoms | 9 August 2019 |
Sky Q2 2019 results: strong subscriber growth and long-term investment in original content Sky’s Q2 results were encouraging overall, with significant subscriber growth swinging direct-to-consumer revenue growth back to positive. ARPU declined once more, since new streaming customers are taking lower-priced products, but total revenue growth accelerated to 2.4% EBITDA rose 20%, primarily due to the dropping out of some large one-off costs. Next quarter, Sky will begin making savings on the new Premier League rights contract, and increased football rights costs in Italy and Germany will have annualised out Having launched Sky Studios in June, Sky is focused on producing original European content, with ambitions to double spend over the next five years, in a calibrated response to the Netflix-led race for content
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Media, Telecoms, TV, UK Media | 6 August 2019 |
Vodafone: some signs of life but an uncertain road to recovery Vodafone’s newfound focus on performance improvement is showing signs of delivering – more on the cost than revenue side. Tower sharing has the potential to ultimately enhance European cashflow by 10% The revenue picture is more mixed with churn improving but a very varied operational picture across its major European markets Although Vodafone highlights the potential for German cable to drive growth post Liberty Global deal completion, their current 0.4% growth in Germany does not give cause for optimism
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Media, Telecoms | 31 July 2019 |
More info on BritBox, more questions: ITV H1 results ITV experienced a slightly-less-than-expected 5% drop in advertising revenue which was alleviated by lower H1 content scheduling costs, reflecting the timing of major sporting events Love Island continues to be a ray of light, increasing its viewership and guiding the ITV Family audience share to an eleven-year high, while ITV Studios revenues were down but reportedly still on track for its 2019 targets More information was provided on the Q4 rollout of streaming service BritBox and the addressable advertising platform for ITV Hub. ITV must be active in these areas but late entry presents problems and questions
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Media, TV | 29 July 2019 |
O2: Lower costs mitigate the challenging environment O2’s service revenue growth slipped decisively into negative territory at -1.8% this quarter as the punishing regulatory regime took its toll Underlying EBITDA growth of 4% was particularly impressive in the circumstances; likely aided by more direct distribution as well as tight cost control The coming week will unveil how this compares to peers; we anticipate results which reflect a tough environment with little let-up on the horizon
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Media, Telecoms | 26 July 2019 |
Slower but steadier: TalkTalk Q1 2019-20 results TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017TalkTalk suffered subscriber losses and falling consumer revenue growth in Q1, with churn still high despite the high speed base growing, countered by ARPU growing for the first time since 2017 The subscriber drop was, however, modest and looks quite deliberate, with there being evidence of price firming in both direct and indirect channels supporting both ARPU and margin This more cautious approach, if it can be sustained, puts the company on a much more healthy footing in our view, allowing it to achieve its financial targets without increasingly unsustainable existing customer price rises
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Media, Telecoms | 23 July 2019 |