Report Overview


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Looking to annualisation and beyond: UK mobile market in Q1 2021


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GAIN ACCESS

Contents

Executive summary: looking to annualisation and beyond

UK mobile market: last quarter of lockdown hit?

Competitive performances: lots of noise in service revenue trends

Assessing performance: neither service nor total revenue growth are perfect measures

Annualisation a significant uplift, unwind less certain

Net adds: a quiet quarter, O2 in the red

Churn: lockdown curtails churn, outlook less favourable

ARPU visibility reduced

In-contract price rises a drag on momentum rather than a boost this year

Pricing: competition creeping up

Unlimited pricing: O2 gets in on the act

Financial performance: O2 impresses on EBITDA

Financial performance: cashflow pressure at H3G and now Vodafone

O2-Virgin Media: merger completed on 1 June

5G spectrum auction: all change on the capacity front

5G spectrum auction: why the bargain basement prices?

5G spectrum auction: one spectrum trade helps but is not the ultimate solution

5G rollout much less aggressive than 4G—for good reason

Open RAN: be careful what you wish for

UK tower companies: increasing activity in a complex market

UK towers outlook: limited growth opportunities, merger potential long-term

MNO consolidation prospects mounting, but hurdles to overcome

End-of-contract legislation now resumed—putting upward pressure on churn

Out-of-contract notifications now sent to all subscribers—many of them in Q1 2021

COVID-19 creates longer-term challenges…and opportunities

Huawei now banned from 2027 at great cost to the sector

Shared Rural Network agreement finalised

IFRS 15 reporting note

IFRS 15 and means of distribution as a driver of revenue trends

Zero-rating

Previous contract price increases for existing customers

Spectrum ownership

Disclaimer

 

Figures and Tables

Reported mobile service revenue growth

UK MNO mobile market net adds (000s)

Reported mobile service revenue growth by operator

Reported total mobile revenue growth by operator

BT/EE total revenue and service revenue growth (IFRS 15)

O2 total revenue and service revenue growth (IFRS 15)

Vodafone total revenue and service revenue growth (IFRS 15)

H3G total revenue and service revenue growth (IFRS 15)

Change in COVID-19 impact from Q3 to Q4 and outlook 2021

Contract net additions (000s)

Annualised contract churn

Contract ARPU growth

Blended ARPU growth

SIM-only share of contract subscriptions

MNO price increases in 2021

Inflation-linked price increases, 2020-2021

‘Sweet spot’ bundle with iPhone 6s/7/8/XR/11/12

SIM-only pricing by data allowance (GB)—November 2020

SIM-only pricing by data allowance (GB)—May 2021

12-month, SIM-only unlimited data bundle pricing (£/month)

18-24-month, SIM-only unlimited data pricing (£/month)

EBITDA margin, last 12 months

EBITDA growth, last six months

EBITDA, last six months (£m)

Cashflow, last six months (£m)

Capex, last 6 months (£m)

Cashflow (EBITDA-capex) margin, last 12 months (£m)

Residential market shares (including pay TV)

Total market shares (including pay TV)

Spectrum holding by operator (MHz)

Operator shares of capacity

Cost of spectrum at actual price paid, reserve price, and historic market prices (£m)

Spectrum acquired and prices paid by operators

Spectrum allocation in the 3.4-3.8 GHz band

Estimated 5G coverage by operator

4G (dotted line) versus estimated 5G (dots) coverage by operator

Selected OpenRAN trials and commitments

UK mobile networks and infrastructure

ROCE using spectrum at current value and market shares

Potential drag from loss of ‘sleepers’

Timing and impact of out-of-contract notifications and discounts

UK underlying service revenue vs GDP growth

Huawei’s market shares

UK mobile coverage (% of landmass)

IFRS 15 effect of indirect and direct mobile contract distribution

UK zero-rated data offers

Select previous MNO price increases

Mobile network operator spectrum ownership (both up and down MHz)