VMO2 ended 2025 on a slowing note, with broadband still being hit by altnets and mobile impacted by negative publicity surrounding an October pricing change.

Guidance for 2026 at 3-5% declines for proforma service revenue and EBITDA looks bleak, driven by current momentum and various built-in technical factors, including wholesale payments to nexfibre.

We are not convinced that the agreed nexfibre /Netomnia deal is in any sense a panacea for VMO2’s issues, but there are other green shoots that could help the company back to growth beyond 2026.

Disney’s decision to license to OpenAI’s Sora is necessary to regain agency in a consumer ecosystem dominated by rampant unlicensed IP usage. The deal reflects an ongoing pattern of opportunistic, equity-driven deals by Disney in high-profile technology categories.

Movie and TV content owners’ ability to replicate similar deals to protect their IP assets is limited by vague engagement pathways and opaque or non-existent revenue sharing models combined with dealmaking constraints at AI operators, some of which are developed in China.

Even within the parameters of a deal, the ongoing risk of a public display of malfunctioning guardrails with licensed IP is real, as it is on non-licensed models. In-house AI expertise and stronger copyright compliance will require additional investment to ensure slippery usage is minimised.
 

VMO2/nexfibre has agreed to buy Netomnia, in a complex multi-party deal involving additional wholesale deal components between VMO2 and nexfibre which will leave nexfibre wholesaling 8 million premises to VMO2, or c.40% of VMO2’s overall footprint.

The purchasers are hopeful of an easy regulatory clearance, but we fear the process may be more protracted given the high overlap and removal of a major competitor.

The impact on VMO2 and other incumbent players is prima facie positive, given that it takes out a major subscriber gainer, but we fear that it will be structurally unhelpful, with the high price encouraging other altnets to continue to disrupt in the hope of a similar take-out.
 

Growing BVOD usage in 2025 was unable to offset declining broadcast viewing, whilst YouTube continued its advance on the TV set and SVOD engagement growth was driven by older viewers.

Households are increasingly shifting towards IP-delivered video, whether through IP-only devices, or more likely hybrid UK TV platforms.

Young people’s viewing to SVOD services is less volatile across the year and throughout the day than YouTube and broadcasters—the latter of which is more likely to be shared with other people.

BT had a solid Q3 in financial terms, with various oneoffs hitting headline growth rates but underlying trends very much robust.

The highlight was reduced broadband line losses for Openreach, both in the quarter and in prospect, with retail altnets slowing faster than CityFibre improves.

Recent developments put the pace of altnet consolidation in doubt, but we expect reduced pressure on BT Consumer and Openreach in 2026 regardless.
 

Service revenue trends and themes were broadly consistent with those of last quarter, with management commentary suggesting German EBITDA decline of 8%+ this year.

Strong growth from VodafoneThree, better underlying trends in Germany, and fortuitous currency moves are all likely to be required to hit analyst estimates for next year, and there are reasons to be optimistic about prospects for at least some of them.

VodafoneThree’s mobile strategy seems to be quite defensive for now, save for a foray into the family market, and its approach to FWA looks likely to be quite cautious too.

Display advertising is forecast to grow c.7% in 2026 despite lacklustre consumer confidence, out of sync with the gradual economic recovery.

Online advertising has doubled its share of online consumer spend since 2015. Major ad platforms account for over 40% of all UK display advertising spend.

Mature media’s prospects more closely align with the UK economy, with real term growth unlikely this year.

Project Gigabit has made reasonable progress in allocating subsidy contracts covering 1.1 million premises, and the contract holders look on track to complete their build-outs well before the 2032 deadline.

However, this leaves c.1.5 million premises still without the prospect of gigabit broadband, no firm steer as to when contracts covering these might be awarded, and a reduced per-home budget available to cover them.

Openreach looks likely to win most or all of these, and to take over earlier contracts should altnets pull back or fail (an increasingly likely occurrence), increasing its share of subsidised coverage from the current c.30% to around 70% or above.

Disney's Entertainment revenues rose 5% year-on-year to $26.0 billion in Q1, although content and marketing costs pressured operating income down (-9%, $4.6 billion). Management outlined its plan to create a Disney+ home for AI content.

Although a very early development, after 18 months of widening, improvements in Disney+'s UK engagement has seen its gap with Netflix contract.

Disney's global marketing reorganisation—including the development of a brand stewardship function led from the top of the company—is a broadly positive move from an outfit laboured with long-entrenched vertical silos. 

Recently awakened sleeping giant Amazon is using its vast resources to ramp up an aggressive open web stance, offering advertisers low take rates through its DSP.

Adtech firms risk destroying their own margins in response, so are increasingly extending their positions across the value chain as they compete to offer ‘end-to-end’ services.

2026 will be make or break for the agency holding company model as Omnicom resets and WPP’s need to see the benefits of its turnaround becomes urgent.