Report Overview

European mobile in Q2 2019: No real let-up

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

Contents

Executive summary – no real let-up

Reported and underlying revenue growth

• Sort of improving….but not really
• North/South divide begins to narrow as the North takes a dip
• Vodafone bouncing back on revenues, struggling with net adds
• Intra-EU calls drag to double next quarter
• A staggered start for 5G with some new entrant interest
• Vodafone convergence strategy dampening German growth

Country analysis

• UK – worst performance in five years
• UK outlook remains challenging
• France – the good news story of the quarter
• Germany – O2 resurges
• Italy – lack of improvement disappointing
• Italy – ARPU risk diminishing, sub-brands more aggressive
• Spain – Orange weakening, Vodafone struggling

Appendix

• Mobile termination rates (MTR) drag in Spain eases
• More-for-more price increases
• Zero-rated data offers
• Reported mobile service revenue
• Consolidation and convergence timeline

List of charts/tables

Figure 1. Service revenue growth by market

Figure 2. Reported mobile revenue growth – top 5 European markets

Figure 3. Service revenue growth by operator group – top 5 European markets

Figure 4. Mobile service revenue growth in Northern and Southern markets

Figure 5. Drivers of 2018 trends in major EU mobile markets

Figure 6. Mobile service revenue growth vs peers in top 4 European markets

Figure 7. Vodafone contract net adds in top 4 European markets

Figure 8. Intra-EU calling prices – Euro cents per minute

Figure 9. UK scenario analysis – revenue and EBITDA drag from EU calls price cap

Figure 10. Recent and forthcoming spectrum auctions

Figure 11. Spectrum auction results in Germany

Figure 12. Annual change in contract ARPU

Figure 13. Change in customer lifetime contribution due to converged bundle

Figure 14. Contract net additions (000)

Figure 15. Service revenue growth

Figure 16. Reported mobile service revenue growth by operator

Figure 17. Outlook for change in mobile trends in 2019 by operator

Figure 18. Contract net additions (000)

Figure 19. Service revenue growth, reported and excluding VAT impact

Figure 20. Service revenue growth by operator

Figure 21. Contract net additions (000)

Figure 22. Service revenue growth, reported and excluding MTR impact

Figure 23. Service revenue growth by operator

Figure 24. Total subscriber net additions (000)

Figure 25. Reported service revenue growth

Figure 26. Service revenue growth by operator

Figure 27. Iliad’s pricing compared to the other MNOs, September 2019 (€)

Figure 28. Iliad’s pricing compared to the other MNOs, May 2019 (€)

Figure 29. Contract net additions (000)

Figure 30. Service revenue growth, reported and excluding MTR impact

Figure 31. Service revenue growth by operator

Figure 32. European MTR rates (Euro cents)

Figure 33. Regulatory impact – top 5 European markets

Figure 34. Regulatory impact by market

Figure 35. More-for-more offer selections

Figure 36. Zero-rated offers

Figure 37. Reported mobile service revenue

Figure 38. European MNO consolidation timeline