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.

Thursday, November 16, 2017

Tencent Racks Up Rapid Growth

Tencent reported a 61% year-on-year increase in revenues to 65.2 billion yuan (9.83 billion US dollars) for the third quarter. Chairman and CEO of Tencent, Ma Huateng, said: "We recorded strong business and revenue growth across multiple business lines including games, digital content, online advertising and payment-related services. In particular, our video platform gained audience and revenue market share, we believe it has become China’s top online video platform in terms of mobile daily active users and subscriptions. We believe this success reflects our increasing investment in self-commissioned video content, our improved selection of licensed video content, and our scheduling and audience management initiatives."

The group said that Tencent Video has exceeded 43 million fee-based subscriptions, adding: "We will continue to increase our investment in video content, especially self-commissioned video content, and to reinforce our content recommendation algorithms."

Tencent also reported that it now has 980 million monthly active users of the Weixin/WeChat messaging service, representing year-on-year growth of 15.8%. The service handles approximately 38 billion messages a day, representing year-on-year growth of 25%. Tencent added that there are now 3.5 million monthly active Official Accounts (business accounts) with monthly active followers of these accounts reaching 797 million in aggregate, representing year-on-year growth of 14% and 19% respectively.  source: Tencent statement

Tuesday, November 14, 2017

Europe Offsets India for Vodafone

Vodafone reported a 4.1% year-on-year fall in group revenue to 23.1 billion euros for the six months ending September 30th, blaming the deconsolidation of Vodafone Netherlands and currency movements.  That figure doesn't include Vodafone India, which is now merging with rival Idea Cellular.  Vodafone India's service revenues were down 15.8% over the six month period. Vodafone said that group service revenue rose 1.3% on an organic basis in the quarter ending September 30th (excluding Vodafone Netherlands and Vodafone India) driven primarily by "our growth engines of mobile data, fixed/convergence and enterprise."

Vittorio Colao, CEO, commented: "Revenue grew organically in the majority of our markets driven by mobile data and our continued success as Europe’s fastest growing broadband provider. Enterprise revenues continue to grow, led by our Internet of Things (‘IoT’), cloud and fixed services ... In India competition remains intense. There are however signs of positive developments in the Indian market, with consolidation of smaller operators and recent price increases from the new entrant. ...we will continue to implement our strategic initiatives, including fibre infrastructure expansion in Germany, Portugal and the UK; our entry into the consumer IoT market with the launch of “V by Vodafone”; and the ‘Digital Vodafone’ programme designed to enhance our customers’ experience, increasing revenues and cost efficiency.” source: Vodafone statement

Thursday, November 9, 2017

Deutsche Telekom Maintains Some Momentum

Deutsche Telekom reported year-on-year organic growth of 3.3% for the third quarter to 18.3 billion euros on the back of an "unbroken broadband boom" in Germany and other "positive rends in Europe". In Germany, service revenue rose 0.5%, while service revenue in the US climbed 6.5% to 7.4 billion US dollars as T-Mobile US added another 1.3 million customers.

In Germany, DT added another 700,000 customers (retail and wholesale) for its fibre broadband service and 65,000 new customers for its Entertain proposition. Source: Deutsche Telekom presentation

Friday, November 3, 2017

Apple Sees Another Surge in Services

Apple reported a 12% year-on-year increase in revenue for the quarter ending September 30th 2017 to 52.6 billion US dollars. iPhone sales rose 2%, while service revenue leapt 34% to 8.5 billion dollars.  Apple forecast revenue of between 84 billion and 87 billion dollars for the current quarter, which would represent a year-on-year increase of between 7% and 11% over the record 78.4 billion dollars it generated in revenue in the equivalent quarter last year. source: Apple statement

Friday, October 27, 2017

High Fibre Diet for China Telecom

China Telecom reported a 7% year-on-year increase in service revenues to 83.88 billion Chinese yuan  (12.62 billion dollars) in the third quarter, as the number of fibre-to-the-home subscribers leapt 25% to 121.8 million. source: China Telecom operating data

China Mobile Enjoys Data Boom

China Mobile reported telecoms services revenue of 167.3 billion Chinese yuan (25. 2 billion US dollars) for the third quarter, up 7% year-on-year from 155.8 billion yuan a year earlier. The operator said it now has 622 million 4G customers, up from 535 million a year earlier. Voice usage in the quarter fell 7% year-on-year to 954 billion minutes, while SMS usage slipped 0.5% to 135.8 billion messages. However, handset data traffic rose 122% to 3.32 trillion MB. source: China Mobile operating data

Amazon Cranks Up Technology and Content Spending

Amazon reported a 29% year-on-year increase in net sales on a like-for-like basis to 43.7 billion US dollars in the third quarter. However, its spending on technology and content in the first nine months of 2017 rose 41% year-on-year to 16.3 billion dollars, as Amazon pushes hard to establish its Alexa personal assistant as a new consumer computing platform.

“In the last month alone, we’ve launched five new Alexa-enabled devices, introduced Alexa in India, announced integration with BMW, surpassed 25,000 skills, integrated Alexa with Sonos speakers, taught Alexa to distinguish between two voices, and more. Because Alexa’s brain is in the AWS cloud, her new abilities are available to all Echo customers, not just those who buy a new device,” said Jeff Bezos, Amazon CEO. “And it’s working — customers have purchased tens of millions of Alexa-enabled devices, given Echo devices over 100,000 5-star reviews, and active customers are up more than 5x since the same time last year. With thousands of developers and hardware makers building new Alexa skills and devices, the Alexa experience will continue to get even better.”  source: Amazon statement

Alphabet Reports Another Strong Quarter

Alphabet, the parent of Google, reported a 24% year-on-year increase in revenues for the third quarter to 27.77 billion US dollars. "Our culture of innovation is building our non-advertising revenue streams in cloud, play and hardware," said Ruth Porat, CFO of Alphabet, on a conference call with analysts. "Earlier this month, for example, we launched our expanded line of hardware products, bringing the best AI software and hardware together and building on the first generation of Made by Google products we introduced last year. Longer-term, we remain excited about the opportunities in our Other Bets with ongoing progress."

source: Google statement

Thursday, October 26, 2017

Spain Lifts Orange Again

Orange reported a 0.9% year-on-year increase in revenues on a comparable basis in the third quarter to 10.27 billion euros. Orange said "the impact of new regulations in Europe, with the end of roaming charges for customers travelling in Europe, was largely offset by increased interconnection revenue with operators in other European countries (visitor roaming) resulting from increased usage by their customers on Orange networks across Europe."

In Spain, Orange reported strong growth in mobile services revenue (+7.5% in the third quarter, unchanged from the second quarter), while fixed broadband revenue rose 8.3%, as in the second quarter. source: Orange statement

Telefónica Buoyed by Video and M2M

Telefónica reported a 4% year-on-year increase revenues in the third quarter to 12.75 billion euros on an organic basis, driven by a 3.3% increase in service revenues. Mobile data revenues climbed 16.3% year-on-year in organic terms.

Telefónica reported digital services revenues of 1.3 billion euros for the quarter, as year-on-year growth accelerated sequentially to 8.1% due to the improved revenue performance from video, cloud and M2M.  source: Telefónica statement

Wednesday, October 25, 2017

América Móvil Ekes Out Growth

For the third quarter, América Móvil reported a 1.5% increase in service revenues at constant exchange rates to 210 billion Mexican pesos (10.9 billion US dollars), despite the impact of the natural disasters that hit Mexico, Puerto Rico and, to some extent, the U.S. In Latin America, mobile data revenues were up 24% year-on-year. source: América Móvil statement 

AT&T Suffers Sales Fall

AT&T reported revenues for the third quarter of 39.7 billion dollars, down almost 3% year-on-year. It said the fall was primarily due to declines in legacy wireline services and consumer mobility. In the wireless market, AT&T is facing aggressive competition from T-Mobile US and Verizon Wireless, in particular.

Revenues in AT&T's entertainment unit also declined year-on-year, falling 100 million dollars to 12.6 billion dollars for the third quarter.  Hurricanes and earthquakes also shaved 100 million dollars off group revenue, AT&T added. Source: AT&T statement

Friday, October 20, 2017

Ericsson's Sales Slump Slows

Ericsson reported a 3% year-on-year fall in revenues in the third quarter on a like for like basis to 47.8 billion Swedish krona (4.96 billion euros).  CEO Börje Ekholm said:"The general market conditions continue to be tough... Sales in North America, adjusted for comparable units, currency and the rescoped managed services contract were stable. We also saw growth returning in several countries as operators are increasing their investments in network capacity. Sales in Mainland China declined as the market is normalizing following a period of significant 4G deployments, representing more than 60% of global 4G volumes in the industry. We have managed to increase our LTE market shares in Mainland China to position Ericsson in 5G." Source: Ericsson presentation

Wireless Equipment Revenue Lifts Verizon

Verizon reported a 2.5% year-on-year increase in revenues in the third quarter to 31.7 billion U.S. dollars.  Although wireless service revenue fell 5.1% to 15.8 billion dollars,  wireless equipment revenue was up 5.5% and wireline revenue rose 1.1% thanks to the acquisition of XO Communications.

The U.S. operator said telematics revenue was over 220 million dollars in the quarter, including Fleetmatics and Telogis, while total Internet of Things revenue increased approximately 13% in the quarter on an organic basis.  Matt Ellis, CFO, added: "In terms of the over-the-top [video].. this is a space where we think there's an opportunity for us to play. We think that it makes sense for us to play in that space, but we don't want to launch just a me-too type product. So we are continuing to look at what makes sense for us to launch something that's differentiated in that space. Probably around live programming. But how and when we launch something will be TBD." source: Verizon statements

Tuesday, October 17, 2017

Netflix Promises More Original Content

Netflix reported a 33% year-on-year rise in global streaming revenue to 2.9 billion US dollars in the third quarter, driven by a 24% increase in average paid memberships and 7% growth in the average selling price.  The company said it added 5.3 million members globally (up 49% year-over-year). For the fourth quarter, it forecast global net adds of 6.3 million (1.25 million in the US and 5.05 million internationally).

Netflix recently announced price increases in many markets for its HD and 4K video plans while keeping its standard definition plan mostly unchanged.

Netflix said: "Investors often ask us about continued access to content from diversified media companies. While we have multi-year deals in place preventing any sudden reduction in content licensing, the long-term trends are clear. Our future largely lies in exclusive original content that drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes. Our investment in Netflix originals is over a quarter of our total P&L content budget in 2017 and will continue to grow. With 17 billion dollars in content commitments over the next several years and a growing library of owned content (2.5 billion dollars net book value at the end of the quarter), we remain quite comfortable with our ability to please our members around the world. We’ll spend 7-8 billion dollars on content (on a P&L basis) in 2018." source: Netflix statement

Thursday, September 28, 2017

Europe's Biggest Tech Companies

Infographic: Europe's Tech Giants | Statista Source: Statista
Note, Skype is a wholly-owned subsidiary of Microsoft, so shouldn't feature in this graphic.

Infographic: Tech Investors Turning Their Sights on Europe | Statista Source: Statista

Wednesday, August 2, 2017

Apple Gives Buoyant Outlook

Apple reported a 7% year-on-year increase in revenue for the quarter ended July 1 to 45.4 billion US dollars. Apple said iPhone sales were up 3% to 24.8 billion dollars, while services revenue leapt 22% to 7.3 billion dollars.

Apple forecast that revenue in the current quarter will be between 49 billion and 52 billion dollars, compared with 46.9 billion dollars in the same quarter last year. That would represent an increase of between 4% and 11%. Source: Apple statement

Monday, July 31, 2017

Amazon Web Services Drives Growth

Amazon reported a 25% year-on-year increase in sales to 38 billion US dollars in the second quarter, compared with growth of 31% in the second quarter of 2016. Excluding the impact of foreign exchange movements throughout the quarter, net sales increased 26%, Amazon added. Sales by Amazon Web Services, the cloud business, grew 42% year-on-year.

Amazon expects net sales to be between 39.25 billion and 41.75 billion dollars in the third quarter, which would equate to growth of between 20% and 28% compared with third quarter 2016. This guidance anticipates an unfavourable impact of approximately 125 million dollars or 40 basis points from foreign exchange rates. Source: Amazon statement

Friday, July 28, 2017

Verizon Remains Under Pressure

Verizon reported a 2% year-on-year fall in revenues for the second quarter, after excluding the impact of divestments and acquisitions, to 30.5 billion US dollars. Wireless service revenue was down 6.7% year-on-year, while wireline revenue was down 2.8%, after excluding the impact of the acquisition of XO Communications. Verizon said its organic telematics and Internet of Things revenue rose 20% year-on-year, while telematics revenue alone totalled 220 million dollars.

Matt Ellis, CFO of Verizon, said the decline in wireless service revenue "was primarily due to the lost overage revenue, driven by plans introduced during summer of 2016 and the introductory unlimited offer. .. At the end of the second quarter, about 59% of our accounts have tools that offer customers the ability to self-manage their usage experience.

"During the second quarter, we experienced an improvement in the rate of decline in line access revenue as we now have roughly 75% of the postpaid phone base on unsubsidized plans. We expect this trend will continue, which, combined with adding new accounts and migrating customers to higher access points, will mitigate the lost overage revenue. Therefore, we believe the service revenue trend has flattened. And we expect that there will be an improving trend in the second half and we should exit the fourth quarter inside a decline of 4.0%." Source: transcript of Verizon earnings call.

Tuesday, July 25, 2017

Google's Cost Per Click Plummets

Google's parent company, Alphabet, reported a 23% year-on-year increase in revenues for the second quarter on a constant currency basis to 26 billion dollars. Although paid clicks on adverts brokered by Google increased 52%, the aggregate cost per click fell 23%.

Still, Ruth Porat, CFO, said: "Advertising revenues benefitted from the strong performance insights, which was led in particular by tremendous results in mobile search with a strong contribution from YouTube....Healthy growth and network revenues was driven by our programmatic business. We also had substantial growth in other revenues from Cloud, Play and hardware." source: Seeking Alpha transcript 

Friday, July 21, 2017

Vodafone Sees Some Stability in India

Vodafone reported a 2.2% year-on-year increase in service revenue on an organic basis for the quarter ending June 30. The rise was fuelled by a 7.9% increase in revenues from Africa, Middle East, Asia and Pacific, whereas Europe saw more muted growth of 0.8%.

Vittorio Colao, CEO, said: “Although competition in India remains intense, service revenues stabilised compared with the prior quarter. Our substantial investments in network leadership, an excellent customer experience and even greater ‘more-for-more’ propositions for customers are enabling us to monetise strong demand for mobile data. .. Our world-leading Internet of Things platform contributed to another quarter of solid growth in enterprise.” source: Vodafone statement

Wednesday, July 19, 2017

Netflix Sees Strong Growth Again

Bolstered by international expansion, video streaming service Netflix reported a 32% year-on-year increase in revenues for the second quarter to 2.8 billion US dollars. It forecast that revenues will rise 30% in the third quarter to just shy of 3 billion dollars. Paying members in the US rose one million during the second quarter to 50.3 million, while paying members outside the US rose 4.1 million to 48.7 million.

Netflix added: "YouTube is earning over a billion hours a day of consumers’ time with one type of entertainment, while we are earning over a billion hours a week with our type of entertainment. ..  we’ve grown from zero to over 50 million streaming households in the US over the last 10 years, and yet HBO continues to increase its US subscriptions...The largely exclusive nature of each service’s content means that we are not direct substitutes for each other, but rather complements...The internet may not have been great for the music business due to piracy, but, wow, it is incredible for growing the video entertainment business around the world." source: Netflix statement

Tuesday, July 18, 2017

Ericsson Struggles with Lack of Demand

Ericsson reported a year-on-year 13% decline in sales to 49.9 billion Swedish krona (6 billion US dollars) on a comparable basis for the second quarter.  Börje Ekholm,  CEO of Ericsson, said: "Our current view of the Radio Access Network (RAN) equipment market outlook is in line with external estimates of a high single-digit percentage decline for the full year 2017." source: Ericsson statement

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

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 Claims One Billion Hours A Day

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