Market Report, "United Kingdom Telecommunications Report Q1 2014", published

The UK telecoms market is mature with a high penetration of all services, and a good roll-out of next generation services. As a result of its maturity the UK market has diminished opportunities for subscription growth, and operator strategies reflect this by increasingly focusing on value generation from subscriptions. In the mobile market this means operators are focused on rolling out LTE, with three networks operational from the end of August 2013, as well as VAS such as mobile advertising and payments. Meanwhile, in the fixed broadband sector, operators continue to target the converged services market through the provision of triple- and quad-play packages, with BSkyB the outperformer in this area since 2010.

Key Data

* In Q313, mobile subscription was 77.269mn with a penetration of 122.4%. This represents a 0.5% increase over the previous quarter.
* Smartphone penetration has continued to rise, with operator data showing it reached around 50% in mid-2013, as the wider availability of high-spec low-cost Android handsets drives proliferation of ownership.
* The residential and small business fixed broadband market climbed by 5.4% in 2012, with a bias towards higher speed technologies such as cable and fibre, according to data from the telecoms regulator Ofcom.

Full Report Details at
- http://www.fastmr.com/prod/763958_united_kingdom_telecommunications_report_q1_2014.aspx?afid=303

Key Trends And Developments

Everything Everywhere's LTE monopoly was ended on August 29 2013 when O2 and Vodafone both launched commercial services. O2's service was available over a wider area at launch, with its LTE plans available in three cities - London, Leeds and Bradford. Meanwhile, Vodafone UK's LTE infrastructure was initially available for customers in London only, but it plans to extend the service to Bradford, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle by end-2013, and reach 98% population coverage by 2015. Meanwhile, 3, the only operator without LTE services at the time of writing, announced that it would inaugurate its 4G network in December 2013 in London, Birmingham and Manchester before expanding to 50 cities by YE14 and reaching 98% population coverage by YE15. BMI expects that the arrival of competition in the LTE market will help to drive subscription growth via price competition.

Related to the launch of LTE services is the deal between O2 and leading cable operator Virgin Media for backhaul capacity. In July 2013 O2 signed a 10-year backhaul deal with Virgin Media Business, utilising under capacity on Virgin's network and alleviating a potential bottleneck for O2's 4G speeds. Under the deal, O2's base stations will be linked with the Virgin Media fibre network through a high-capacity Ethernet service possessing the ability to deliver speeds of 1Gbps between the cell site and the aggregation network. BMI believes the deal to be positive for both parties, and is especially important given the sale of the majority of O2's wireline operations to BSkyB earlier in 2013.

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