Report Overview

The North heads south: European mobile in Q4 2018

European mobile service revenue growth dropped to -1.3% – its lowest level in three years – particularly disappointing as growth should be bouncing back post-EU roaming tariff cuts

Having enjoyed relatively favourable dynamics in 2018, the UK and Germany are facing marked changes in momentum from here

Regulation limiting intra-EU call prices could hit hard – up to 6% of revenues and 20% of EBITDA in the UK, although other EU countries may be less exposed due to lower tariffs currently

Contents

Executive summary – The North heads south

Reported and underlying revenue growth

• The North heads south
• North/South divide narrows and likely to narrow further
• Vodafone bottoming out while others dip
• Intra-EU calls could be a very meaningful drag
• 5G auctions may herald a new entrant in Germany
• Huawei ban could make 5G later and more expensive
• Iliad’s prospects
• Vodafone convergence strategy still hurting

Country analysis

• UK – growth taking another dip
• UK – challenging outlook for 2019
• France – Iliad’s struggles drag everyone lower
• Germany – disappoints again
• Italy – TIM succumbs to the pressure
• Spain – Vodafone bottoming out

Appendix

• Mobile termination rates (MTR) drag only in Spain
• 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. Huawei global revenue ($bn)

Figure 12. Huawei UK installed equipment market shares

Figure 13. Iliad cash flows in France (€m)

Figure 14. Iliad’s Italian subscriber growth projection (m)

Figure 15. Vodafone Germany fixed/mobile bundle discount analysis

Figure 16. Change in customer lifetime contribution due to converged bundle

Figure 17. Contract net additions (000)

Figure 18. Smartphone-only homes by age, UK 2018

Figure 19. Reported mobile service revenue growth by operator

Figure 20. Outlook for change in mobile trends in 2019 by operator

Figure 21. Contract net additions (000)

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

Figure 23. Service revenue growth by operator

Figure 24. Contract net additions (000)

Figure 25. Service revenue growth, reported and excluding MTR impact

Figure 26. Service revenue growth by operator

Figure 27. Total subscriber net additions (000)

Figure 28. Reported service revenue growth

Figure 29. Service revenue growth by operator

Figure 30. Contract net additions (000)

Figure 31. Service revenue growth, reported and excluding MTR impact

Figure 32. Service revenue growth by operator

Figure 33. European MTR rates (Euro cents)

Figure 34. Regulatory impact – top 5 European markets

Figure 35. Regulatory impact by market

Figure 36. More-for-more offer selections

Figure 37. Zero-rated offers

Figure 38. Reported mobile service revenue

Figure 39. European MNO consolidation timeline