Report Overview

European mobile in Q1 2019: Toughest conditions in four years

European mobile service revenue growth slipped again to -2.0%; its worst performance in four years

Regulation limiting intra-EU call prices could hit hard next quarter – with the UK likely to be hardest hit by up to 6% of revenues and 20% of EBITDA

Excluding the EU-call impact, we see greatest scope for improving trends in Italy and France thanks to easier comps and diminishing competitive intensity

Contents

Summary

• Executive summary – Toughest conditions in four years

Reported and underlying revenue growth

• Toughest conditions in four years
• North/South divide persists… for now
• Vodafone steps down with everyone else
• Intra-EU calls could be a very meaningful drag
• 5G auctions herald a new entrant in Germany…ultimately…possibly
• Iliad’s prospects
• Vodafone convergence strategy still hurting

Country analysis

• UK – growth taking another dip
• UK – challenging outlook for 2019
• France – a more rational quarter for competition
• Germany – a slight improvement for all
• Italy – Pressure still mounting but outlook better
• Spain – improvement remains elusive

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

Figure 13. Iliad’s Italian subscriber growth projection (m)

Figure 14. Vodafone Germany fixed/mobile bundle discount analysis

Figure 15. Change in customer lifetime contribution due to converged bundle

Figure 16. Contract net additions (000)

Figure 17. Service revenue growth

Figure 18. Reported mobile service revenue growth by operator

Figure 19. Outlook for change in mobile trends in 2019 by operator

Figure 20. Contract net additions (000)

Figure 21. Service revenue growth, reported and excluding VAT impact Reported service revenue growth

Figure 22. Service revenue growth by operator

Figure 23. Contract net additions (000)

Figure 24. Service revenue growth, reported and excluding MTR impact

Figure 25. Service revenue growth by operator

Figure 26. Total subscriber net additions (000)

Figure 27. Reported service revenue growth

Figure 28. Service revenue growth by operator

Figure 29. Contract net additions (000)

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

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 price increases

Figure 36. Zero-rated data offers

Figure 37. Reported mobile service revenue

Figure 38. European MNO consolidation timeline