About this weblog

What you need to know: This weblog captures key data points about the global telecoms industry. I use it as an electronic notebook to support my work for Pringle Media.

Friday, June 23, 2017

YouTube Claims 1.5 Billion Viewers

Susan Wojcicki, CEO of YouTube, said that 1.5 billion "logged-in viewers" visit YouTube each month. On average, viewers spend over an hour a day watching YouTube on mobile devices alone, she added. Wojcicki also signalled that YouTube will continue to invest in original content. "To date, we've launched 37 original series and movies on YouTube Red, and they've generated nearly a quarter billion views," she said. source: YouTube blog post

Verizon and Telefónica Lead on ROCE


Although the US telecoms market is often considered to be less competitive than its counterparts in Europe, Verizon is the only US telco consistently making a better return on capital employed (ROCE) than Telefónica and Orange. For the period between 2010 and 2016, AT&T's average ROCE of 7.2% trails well behind that of Verizon (10.4%) and Telefónica (9.7%).

For more information on US and European telcos' financial performance, see the recent reports published by Pringle Media.

The Kindle version of the US report is available here and the iPad version is here

The Kindle version of the Europe report is available here and the iPad version is here

Tuesday, June 13, 2017

T-Mobile US Matches AT&T on ROCE


On one measure, T-Mobile US is now as profitable as AT&T - return on capital employed (ROCE). In 2016, the subsidiary of Deutsche Telekom made a ROCE of 6.9%, marginally ahead of AT&T. However, for most investors that represents a pretty poor performance.  Over the past seven years, only Verizon has consistently made a respectable ROCE.

The US telecoms industry is entering a pivotal phase in its development. With the laissez-faire Trump administration, the US telecoms market may finally consolidate from four main players to three. Although intense competition seems to be good for consumers, at least in the short term, the aggressive campaign to win market share by T-Mobile US has weakened the profitability of AT&T and Verizon, while causing more pain for long-suffering Sprint.

Having already acquired DirecTV, AT&T is looking to merge with Time Warner as it seeks to become a vertically-integrated provider of consumer entertainment. Verizon is also pushing into content and advertising, albeit through smaller acquisitions, such as the ongoing purchase of parts of Yahoo!, and in-house development.

To explore the case for consolidation, Pringle Media has just published a report tracking and comparing the key financial metrics of AT&T, Verizon, Sprint and T-Mobile US over the past seven years. 

The Kindle version of the report is available here and the iPad version is here.


Wednesday, May 31, 2017

Deutsche Telekom Pulls Away from Peers



In 2016, the revenue gap between Deutsche Telekom and Europe's other leading telcos - Vodafone, Telefónica, Orange and Telecom Italia - widened significantly. Thanks to the performance of T-Mobile US, Deutsche Telekom's revenues climbed above 70 billion euros, while Vodafone, Telefónica and Telecom Italia saw their top line shrink slightly.

However, on other financial metrics, such as return on capital employed (ROCE) and net profit, Deutsche Telekom still trails behind some of its peers. And Vodafone's operations are generating a similar amount of cash to those of Deutsche Telekom, despite the revenue gap.

In 2016, the average ROCE among the big five telcos was 6%, an uptick from 5% in 2015, but down from almost 10% in 2010.

Pringle Media has just published a report tracking and comparing the key financial metrics of these five major telcos over the past seven years. 

The Kindle version of the report is available here and the iPad version is here.

Google Assistant Leads on General Knowledge

Infographic: How Smart Are Source Statista

For more on Amazon Alexa and how it is trying to beat Google and Apple in the battle for the smart home, please see my report for STL Partners.

Tuesday, May 16, 2017

Vodafone Suffers Slowdown



Vodafone reported 1.5% year-on-year growth in service revenue on an organic basis for the quarter ending March 31, 2017. That was slower growth than in the preceding four quarters and Vodafone warned that European roaming regulation will curb future growth. The results were weighed down by weak performances in the UK and India, where Vodafone is facing intense competitive pressure and is merging its operations with those of Idea Cellular.

However, Vittorio Colao, Group CEO, sounded a bullish note, saying: "Sustained investment in network quality has provided the platform to offer more generous plans to our mobile customers in Europe, stabilising contract ARPU, and has allowed us to capture strong data growth in our emerging markets operations. We continue to be Europe’s fastest growing broadband provider, seizing the opportunities created by convergence and winning revenue market share, supported also by our Enterprise business which continues to outperform its peers."

For the financial the year to March 31, 2017, Vodafone reported 700 million euros of revenue from the Internet of Things. It also said it used data analytics to deliver 3.1 billion personalised offers in the financial year. Source: Vodafone presentation



Thursday, May 4, 2017

Facebook Continues to Call Slowdown

Facebook reported a 49% year-on-year increase in revenue to 8 billion US dollars. The social network said that ad revenues in "the rest of the world' region (essentially Latin America and Africa) and Asia-Pacific grew 66% and 60% respectively, while Europe and North America both grew 47%.

Facebook reported that the average price per ad increased 14% and the total number of ad impressions served increased  32%, primarily driven by mobile feed ads. However,  Facebook warned "we continue to expect that our ad revenue growth rates will come down meaningfully over the course of 2017. We expect that ad load will play a less significant factor in driving revenue growth after mid-2017. We also expect desktop ad revenue growth rates to slow in the third quarter  when we begin to lap our efforts to limit the impact of ad blockers."  source: Facebook transcript

Wednesday, May 3, 2017

Services Become Apple's Growth Engine

Apple forecast its revenues will rise between 3% and 7% year-on-year to between 43.5 billion and 45.5 billion US dollars in the current quarter.  In the quarter ending April 1st, revenues rose 5% to 52.9 billion dollars, fuelled by a 18% increase in services revenue to 7.04 billion dollars.

“Our services business grew 19% year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,” said Luca Maestri, Apple’s CFO. source: Apple statement

Friday, April 28, 2017

Amazon Anticipates Slight Slowdown

Amazon reported a 24% increase in net sales to 35.7 billion US dollars in the first quarter of 2017 on a constant currency basis. It forecast that sales will be between 35.25 billion and 37.75 billion dollars in the second quarter, which would mean year-on-year growth of between 16% and 24%. This guidance anticipates an unfavourable impact of approximately 720 million dollars or 240 basis points from movements in foreign exchange rates.  Sales in Amazon Web Services, the cloud business, rose 43% to 3.66 billion dollars in the first quarter. source: Amazon statement

Alphabet Enjoys Another Big Quarter

Alphabet reported a 24% year-on-year increase in revenues (on a constant currency basis) for the first quarter of 2017 to 24.75 billion US dollars. The growth was driven by a 53% increase in paid clicks on adverts hosted on Google properties, which more than compensated for a 21% fall in the price of these clicks.

As it focuses on the development of artificial intelligence, Alphabet's R&D spending rose 17% to 3.94 billion dollars in the quarter. Ruth Porat, CFO of Alphabet, said: "Headcount at the end of the quarter was 73,992, up 1,939 people from last quarter. ... Consistent with prior quarters, the vast majority of new hires were engineers and product managers. In terms of product areas, the most sizable head count growth was in Cloud, consistent with the priority we place on this business." Source: Google statement and Seeking Alpha transcript

Thursday, April 27, 2017

Spain Gives Orange Growth


Orange said revenues rose 0.8% year-on-year in the first quarter of 2017 to 10.1 billion euros, after rising 1% in the 4th quarter of 2016 (on a comparable basis), led by the Europe zone and in particular by strong growth in Spain. It added that fixed broadband revenues increased 6.3%, fuelled by growth in demand for fibre and TV content in France and Spain. Revenues from mobile services were broadly stable, slipping 0.2%. Source: Orange statement

Semiconductors Prop Up Samsung


Samsung Electronics reported a 2% year-on-year rise in total sales for the first quarter to 50.55 trillion Korean won (44.45 billion US dollars). A 40% leap in semiconductor revenues compensated for a 17% fall in mobile sales. However, Samsung said it expects smartphone sales and earnings to rise in 2017 on the back of the launch of the S8 model. Source: Samsung presentation

AT&T Feels Competitive Pressure


AT&T reported revenues for the first quarter of 39.4 billion US dollars, down almost 3% year-on-year. It blamed "record-low equipment sales" in wireless, adding that it is no longer providing consolidated revenue guidance primarily due to the unpredictability of wireless handset sales. However, entertainment and business solutions revenues also slipped downwards. Randall Stephenson, AT&T Chairman and CEO, described it as a "very competitive quarter." source: AT&T statement


Wednesday, April 26, 2017

China Mobile Sees Steady Growth

China Mobile reported a 4% year-on-year increase in revenue for the first quarter of 2017 to 184 billion yuan (26.7 billion US dollars). It also reported a 51% year-on-year rise in 4G customers to 568 million. source: China Mobile operating data


Many Europeans Lack Smartphones

Infographic: Smartphones Aren't as Ubiquitous as You Think | Statista Source: Statista

Thursday, April 13, 2017

Friday, March 31, 2017

Smartphone Sales Lift Huawei


Huawei reported a 32% increase in revenue for 2016 to 521.6 billion Chinese yuan (75.1 billion US dollars). The Carrier business group generated 290.6 billion billion in revenue, an increase of 24% year-on-year, while the Enterprise business group lifted revenues 47% to 40.7 billion yuan. Huawei's Consumer business group shipped 139 million smartphones during 2016, generating 179.8 billion yuan in revenue, up 44%.

"The year 2016 saw a flock of black swans – both political and economic – sweep across the globe. Nevertheless, we maintained our strategic focus, patiently applying ourselves to making breakthroughs and creating real value for our customers," said Huawei's rotating CEO Eric Xu. "Our carrier business, with a continued focus on digital transformation, achieved solid growth by leveraging major opportunities in cloud, video, IoT, and operations transformation." source: Huawei statement

Thursday, March 23, 2017

China Mobile Dials Down Capex


In 2016, China Mobile's revenue rose by 6% to 708.4 billion Chinese yuan (103 billion US dollars), as the giant operator expanded its 4G customer base to 535 million connections (up 71%). China Mobile said it plans to cut capex by 6% in 2017 to 176 billion Chinese yuan, as it prepares to reduce 4G investment by 11% and wireline broadband spending by 47%. The operator plans to "adjust network structures centering on data centers [and] reserve resources in advance to support the future development of 5G and IoT."

China Mobile is aiming to add 100 million Internet of Things (IoT) connections in 2017 (on top of the 100 million it already serves), together with 100 million new 4G subscribers and 20 million wireline broadband customers. source: China Mobile presentation



Thursday, March 2, 2017

Deutsche Telekom Sees Sedate 2017


Deutsche Telekom forecast that its revenues will grow between 1% and 2% in 2017, following a rise of 5.6% in 2016 and a 9.4% increase in the fourth quarter of 2016. Although revenue in Germany declined in the fourth quarter by 0.5% to 5.6 billion euros, revenue in the US leapt almost 24% to 10.2 billion US dollars.

The group forecast it will spend 12 billion euros on capex, excluding spectrum, in 2017 compared with 11 billion euros in 2016. It said: "The ongoing increase of customer numbers in the United States and improving results in the German home market continue to be the main driver of revenue and earnings." Source: Deutsche Telekom presentation
YouTube said that consumers worldwide now use the service to watch one billion hours of video per day. That compares with the 100 million hours of video that is consumed via Facebook each day. Source: YouTube blog post

Friday, February 24, 2017

Samsung Offers Largest Smartphone Selection

Infographic: Is Less More in the Smartphone Market? | Statista Source: Statista

Spain and Fibre Lift Orange


Orange reported revenues of 40.92 billion euros in 2016, a 0.6% increase after falling 0.1% in 2015 and 2.5% in 2014 (on a comparable basis). In the 4th quarter of 2016, revenues rose 1% after rising 0.8% in the 3rd quarter and 0.3% in the first half. Stéphane Richard, CEO of Orange Group, said:"Our investments are driving our commercial performance, led by very high speed fixed and mobile broadband and despite a level of competition that is intense and unprecedented, particularly in France. Our fibre customer base grew 75% with 3.3 million customers by the end of 2016 and our 4G customer base in Europe rose 58% with 28 million customers." source: Orange statement

Telefónica Forecasts Flat 2017


Telefónica forecast that its revenues in 2017 will be stable compared with 2016, despite the negative impact from regulation, which it estimates will amount to 1.2 percentage points. It plans to spend 16% of revenue on capex, excluding spectrum, in 2017.

In 2016, Telefónica's revenues increased 1.3% on an organic basis to 52.04 billion euros. In the fourth quarter of 2016, revenues rose by 2.7% on an organic basis. In 2016, organic growth in broadband revenues accelerated to 16.1%, "services over connectivity" grew by 7.7% and voice and access decreased by 7.9%.

Digital services revenues reached 1.28 billion euros in the fourth quarter (+11.1%) and 4.79 billion in 2016 (+14.1%). Video revenues rose 12.4% to 2.8 billion euros in 2016, "driven mainly by the consistent increase in the TV base in Hispanoamerica (+4%) and by the improvement in ARPU in Brazil and Spain associated with the wider adoption of premium content." Source: Telefónica presentation


Monday, February 6, 2017

Telecom Italia Targets Big Capex Cut

Telecom Italia set a target to increase revenues each year over the period between 2017 and 2019, while keeping the capex/revenue ratio at the end of the three-year period below 20%. For 2016, it reported a 2.5% year-on-year organic decline in revenues to 19.04 billion euros and capex of 4.88 billion euros (a capex/revenue ratio of almost 26%).

Revenues for the fourth quarter were up 0.8% year-on-year in organic terms to 5.1 billion euros, reversing a negative trend that had persisted for 18 quarters. Telecom Italia said: "This positive result was driven by the domestic business unit, which grew by 2.7% in organic terms compared with -2.6% in the fourth quarter of 2015. This result was helped by the introduction of innovative offers aimed, for example, at optimising use of the mobile network in off-peak hours and at retaining the customer base by offering new products ("enabling products") that extend the reach of TIM services into adjacent markets."  source: Telecom Italia statement

Thursday, February 2, 2017

New Competition in India Rocks Vodafone



Vodafone Group reported a 1.7% year-on-year rise in service revenue on an organic basis for the quarter ending December 31, lifted by 0.7% growth in Europe and 3.9% growth in Africa, Middle East and Asia-Pacific (AMAP). Reported group revenue fell 3.9% to 13.69 billion British pounds (17.19 billion US dollars).

Vittorio Colao, CEO, said: "In AMAP, our strong organic performance in South Africa and Turkey was partially offset by India, where the sector is affected by free services from the new entrant. We anticipate intense competitive pressure in India in the fourth quarter and are taking a series of commercial actions, including the extension of 4G services to 17 leading circles. As announced earlier this week, we have also entered discussions with the Aditya Birla Group about an all-share merger of Vodafone India and Idea." source: Vodafone statement

Wednesday, February 1, 2017

iPhone Recovery Lifts Apple

Apple reported a 3% year-on-year rise in revenue for the quarter ending December 31 to 78.35 billion US dollars, fuelled by a 5% increase in iPhone revenue to 54.38 billion dollars. Apple predicted that it will generate between 51.5 billion and 53.5 billion dollars in total revenue in the current quarter, which would represent a year-on-year increase of between 2% and 6%.

"We sold more iPhones than ever before and set all-time revenue records for iPhone, services, Mac and Apple Watch,” said Tim Cook, Apple’s CEO. “Revenue from services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline.” source: Apple statement

In a conference call with analysts, Tim Cook added: "Apple Pay continued its strong momentum, with the number of users more than tripling over the past year and hundreds of millions of transactions and billions of dollars in purchases in the December quarter alone. Transaction volume was up over 500% year over year as we expanded to four new countries, including Japan, Russia, New Zealand, and Spain, bringing us into a total of 13 markets. Apple Pay on the Web is delivering our partners great results. Nearly 2 million small businesses are accepting invoice payments with Apply Pay through Intuit QuickBooks Online, FreshBooks, and other billing partners."

"Services are becoming a larger part of our business, and we expect the revenues to be the size of a Fortune 100 company this year*. Our services offerings are now driving over 150 million paid customer subscriptions. This includes our own services and third-party content that we offer on our stores. We feel great about this momentum, and our goal is to double the size of our Services business in the next four years. Source: earnings call transcript

*General Dynamics, which ranked 100th on the Fortune 100 list in 2015, had revenue of 30.9 billion dollars in that year.

Infographic: iPhone 7 Propels Apple to Record-Breaking Quarter | Statista
Source: Statista

Tuesday, January 31, 2017

Azure and Office 365 Shine for Microsoft

Microsoft reported a 3% increase in revenue on a constant currency basis for the quarter ending December 31 to 25.7 billion US dollars. Its Intelligent Cloud division, which sells the Azure proposition, and its Productivity and Business Processes division, which is responsible for Office 365, led the growth. The More Personal Computing division struggled, dragged down by declining Windows Phone sales and declining revenues from Windows itself.

However, Microsoft did report a 30% increase in Xbox Live users to 48 million, together with "strong growth" in Xbox Live transactional revenue. Source: Microsoft presentation

BT Leans Heavily on Consumer Growth

BT Group expects its underlying revenue to be broadly flat in the year ending March 31, 2018. For the quarter ending December 31, 2016, BT reported that underlying revenue fell 1.5% to 6.13 billion UK pounds (7.69 billion US dollars). That figure was dragged down by a 7% decline in revenue in BT Global Services, which is under investigation in Italy.

In the UK consumer market, BT reported a 4% year-on-year rise in revenues thanks to 83,000 broadband net adds and 52,000 TV net adds. BT said its "consumer 12-month rolling ARPU" increased 8% to 39.4 pounds per month driven by broadband, BT Sport and BT Mobile. EE, the newly-acquired mobile operation, increased revenues by 2%. source: BT statement

Monday, January 30, 2017

Alphabet Flags AI-First Future

Alphabet, which owns Google, reported a 24% year-on-year increase in revenues for the fourth quarter to 26.1 billion US dollars on a constant currency basis. The company said advertising revenue growth was driven by "mobile search with ongoing strength in YouTube and programmatic. We also had substantial growth in other revenues from hardware, Play and Cloud."

Sundar Pichai, CEO of Alphabet, added: "Computing is moving from a mobile-first to AI-first with more universal ambient and intelligent computing that you can interact with naturally, all made smarter by the progress we are making with machine learning. 2016 was the year that this became central to who we are as a company and the products that we built. We had more than 350 launches powered by machine learning across areas like search, maps, messaging and Google Play.

"You've heard lots of these examples; easier e-mail replies and inbox, better YouTube recommendations, the incredible cameras on our Pixel phones, and smarter bidding for advertisers in AdWords.

"This quarter, using neural machine translation, we have improved our translation ability more in one single leap than all our improvements over the last 10 years combined. We'll be rolling neural machine translation out across to more than 100 languages available in Google Translate in 2017 and also for all of our Cloud customers through the Google Cloud Translation API." source: Alphabet transcript

For more on the evolution of artificial intelligence, please see my recent report on deep learning for STL Partners.

Thursday, January 26, 2017

AT&T Forecasts Low Growth in 2017


AT&T forecast its revenues will grow in "the low-single digits" in 2017 following acquisition-fuelled growth of 11.6% in 2016 to 163.8 billion US dollars. In the fourth quarter of 2016, AT&T Mobility revenue fell about 0.5% year-on-year to 18.8 billion dollars, while the entertainment group lifted revenues 1.6% to 13.2 billion dollars. Business solutions revenues fell 1% to 18 billion dollars, while international revenues (mainly Mexico) rose 3.2% to 1.9 billion dollars.

“2016 was a transformational year for AT&T, one in which we made tremendous progress toward our goal of becoming the global leader in telecom, media and technology,” said Randall Stephenson, AT&T Chairman and CEO. “We launched DirectTV Now, our innovative over-the-top streaming service. Our 5G evolution plans and improved spectrum position are paving the way for the next-generation of super-fast mobile and fixed networks. And we shook-up the industry with our landscape-changing deal to acquire Time Warner, the logical next step in our strategy to bring together world-class content with best-in-class distribution which will drive innovation and more choice for consumers." source: AT&T statements


Wednesday, January 25, 2017

Verizon's Core Business Under Pressure


Verizon reported a 2.4% decline in revenue for 2016 on a like-for-like basis to 126 billion US dollars, as wireless revenue fell 2.7%. In the fourth quarter, reported revenue was down 5.6% to 32.3 billion dollars.

But Verizon talked up its new media and Internet of Things businesses. "In the fourth quarter, our digital media business, led by AOL, generated revenue of 532 million dollars net of traffic acquisition costs," said Matt Ellis, CFO of Verizon. "This revenue is down about 5% year over year as expected, due to the revenue lift related to the Microsoft deal in the fourth quarter of 2015, but increased around 10% sequentially, in line with expectations. Organically, Internet of Things revenue was 243 million dollars, up 21% in the fourth quarter. We expect to sustain these strong trends. Including acquisitions, Internet of Things revenue increased more than 60% in the fourth quarter." source: Verizon statements

Thursday, January 19, 2017

Netflix Forecasts Further Strong Growth.

Netflix reported a 35% increase in global streaming revenue in 2016 to 8.3 billion US dollars. It finished the year with 93.8 million members, having added 19 million in 2016 compared with 17.4 million in 2015.

Netflix forecast a 39% rise in streaming revenues to 2.52 billion dollars in the current quarter, together with net member additions of 5.2 million. In the fourth quarter of 2016, streaming revenues rose 41%.

Reed Hastings, CEO of Netflix, said: "We continue to invest in local programming to complement our content offering and as a means to introduce new members to our global library. We are focusing on local content that travels pan-regionally or across multiple territories, such as Japanese anime and Turkish dramas."  source: Netflix statement

Thursday, January 5, 2017

Apple's App Store Enjoys Bumper 2016

Apple said developers earned more than 20 billion US dollars from its App Store in 2016, up over 40% from 2015. Since the App Store launched in 2008, developers have earned more than 60 billion dollars, Apple added.

On New Year’s Day 2017, the App Store sold nearly 240 million dollars worth of apps and content. Apple also reported that the App Store’s subscription billings rose 74% in 2016 to 2.7 billion dollars. source: Apple statement
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