Amazon's Echo Sells Out

Amazon’s Echo, a smart speaker controlled by Amazon’s virtual assistant Alexa, and the smaller Echo Dot are completely sold out on Amazon’s website and won’t become available until after the holidays. Source: Statista

The Echo and Alexa are key elements of Amazon's strategy to sidestep Google's and Apple's control of the smart home market. For more on Amazon's battle with Google and Microsoft for the smart home,  see my recent report for STL Partners.

Most People Still Don't Have Internet Access

Mobile-broadband networks cover 84% of the world's population, yet Internet user penetration stands at just 47.1%, according to the ITU.  "While infrastructure deployment is crucial, high prices and other barriers remain important challenges to getting more people to enter the digital world," the ITU said. Source ITU statement

Global Telecom Capex Sees Uptick

Research firm IHS forecast that worldwide service provider capex will rise 0.7% to 341 billion US dollars in 2016, "mainly propelled by a much-needed wave of investment in wireline broadband—for example, fiber to the X (FTTX)—in Europe. Spending on every type of hardware equipment except wireless and time-division multiplexing (TDM) voice will rise in 2016."

IHS projects that global telecom service revenue will  grow by over a percentage point this year to 1.93 trillion US dollars, after declining 4% in 2015. Source: IHS statement

Vodafone Europe Begins Bounce Back

Vodafone Group said its service revenue rose 2.3% year-on-year on an organic basis in the six months to September 30th. Vittorio Colao, Group CEO, said: "Europe [was] modestly ahead of our expectations - led by Germany and Italy ... Our substantial network investments and ‘more-for-more’ propositions have allowed us to capture opportunities from strong data demand... As Europe’s fastest-growing broadband operator, we are driving rapid uptake of our consumer fixed and TV services while our wholly converged enterprise business continues to outperform its peers.

"Competition in India has increased in the year, reducing revenue growth and profitability. We have responded to this changing competitive environment by strengthening our data and voice commercial offers and by focusing our participation in the recent spectrum auction on acquiring frequencies in the more successful and profitable areas of the country. Overall, we expect to sustain our underlying performance in the second half of the year and remain on track to meet our full-year objectives despite macroeconomic uncertainties." source: Vodafone statement

T-Mobile USA Drives DT Forward

Deutsche Telekom reported a 5.9% year-on-year rise in revenue for the third quarter to 18.1 billion euros. The growth was fuelled by a 18% rise in revenues in the US to 9.2 billion US dollars, as T-Mobile USA added another 1.97 million subscribers in the quarter. In Germany, revenue was flat. source: Deutsche Telekom presentation

Facebook Signals Tougher Times Ahead

Facebook reported a 56% year-on-year increase in revenues for the third quarter to 7 billion US dollars. But the social network warned of slower growth ahead, primarily because it is running short of inventory in which to place adverts (as users will only tolerate so much advertising). "Revenue growth rates will decline in Q4 as we lap a strong fourth quarter in 2015," said Dave Wehner, CFO of Facebook. "Ad load will play a less significant role driving revenue growth after mid-2017. Over the past two years we have averaged about 50% compound revenue growth in advertising. Ad load has been one of the three primary factors fueling  that growth. With a much smaller contribution from this important factor going forward, we expect to see ad revenue growth rates come down meaningfully."

Wehner added that costs will rise: "We anticipate 2017 will be an aggressive investment year. Adding top engineering talent remains one of our key investment priorities as we continue to execute on our 3-, 5- and 10-year roadmap. We will continue to invest in our ability to recruit top technology talent both in the Bay Area and beyond. In addition, we expect to grow capital expenditures substantially as we continue to fund the ongoing data center expansion efforts that we have underway."

Mark Zuckerberg, CEO of Facebook, also flagged an increase in spending on virtual reality content: "And since we believe the next phase of VR is great software experiences, we're investing another $250 million in virtual reality content -- on top of the money that we've already invested." Source: Facebook earnings transcript

Orange Reports Another Uptick

Source: Orange presentation

App and Cloud Sales Lift Google

Alphabet, the parent company of Google, reported a 23% year-on-year rise in revenues on a constant currency basis for the third quarter to 22.5 billion US dollars. Advertising revenues were up 18%, but "other" revenues (from the Play Store, Chromecast, Chromebooks, Android, Google Apps, and the Google Cloud Platform) rose 39%. "Mobile search and video are powering our core advertising business and we’re excited about the progress of newer businesses in Google and Other Bets,” said Ruth Porat, CFO of Alphabet. Source: Alphabet statement

Amazon Flags Continued Slowdown

Amazon forecast that net sales in the fourth quarter will be up between 17% and 27% year-on-year. It said this guidance anticipates approximately 60 basis points of favourable impact from foreign exchange rates. It reported a 29% increase in net sales for the third quarter to 32.7 billion US dollars. It said that the favourable impact from foreign exchange rates amounted to 52 million dollars. In the second quarter sales rose 31% year-on-year.

Amazon Web Services reported a 55% year-on-year increase in sales in the third quarter to 3.23 billion dollars. Source: Amazon statement

Consumers Keep BT Trending Upwards

BT reported a 1.1% year-on-year underlying rise in revenue for the quarter ending September 30th to 6.05 billion UK pounds (7.57 billion US dollars). BT, which has just acquired mobile network EE, said its consumer division posted revenue growth of 11%. It added 63,000 TV subscribers in the quarter, taking the total to 1.7 million Source: BT presentation

Apple Forecasts Small Return to Growth

Apple said it expects to generate revenue of between 76 billion and 78 billion US dollars in the quarter ending December 24th. If Apple hits the higher number, that would be an increase of 3% year-on-year. In the quarter ending September 24th, revenue fell 9% year-on-year to 46.9 billion dollars. Revenue fell 30% in Greater China, while overall iPhone revenue was down 13%. But services revenue rose 24%. Source: Apple statement

AT&T Hopes Entertainment Turns Up

AT&T reported that its revenues fell slightly year-on-year on a comparable basis to 40.9 billion US dollars in the third quarter. Service revenues in its wireless business slipped 0.7% to 15.1 billion dollars, while revenues in its entertainment group rose 1% on a comparable basis to 12.7 billion dollars. AT&T has announced it will buy pay TV group Time Warner for 85 billion dollars to help rekindle growth. Source: AT&T presentation

Ericsson Sees Sales Stagger

Ericsson reported a 14% year-on-year decline in revenues to 51.1 billion Swedish krona (5.7 billion US dollars) for the third quarter of 2016.  Sales fell by approximately one quarter in the Middle East, Africa and India. The company said: "The decline, in both mobile broadband coverage and capacity sales, was particularly strong in markets with a weak macro-economic environment. In addition, capacity sales in Europe were lower than a year ago."

It also signalled further trouble ahead: "The current industry trends indicate a somewhat weaker than normal seasonal sales growth between the third and fourth quarters. In addition a renewed managed services contract in North America, with reduced scope, will impact sales negatively." source: Ericsson statement

China Mobile Flatlines

China Mobile reported revenue of 172 billion Chinese yuan (25.4 billion US dollars) for the third quarter - roughly flat year-on-year. It added more than 6.6 million connections in the quarter,  taking the total to 844 million, of which 481 million are on 4G. source: China Mobile data

Verizon Acknowledges Challenging Environment

Verizon reported a 2.9% year-on-year decline in revenues in the third quarter of 2016 on a like-for-like basis. Group revenues fell to 30.9 billion US dollars as customers in its wireless division "continued to choose unsubsidized device payment plans." However, Verizon said wireless service revenues plus device payment plan billings increased 2.3%.

Chairman and CEO Lowell McAdam added: “While we transform our company in a challenging environment, we have maintained the financial flexibility to invest in our industry-leading networks to better serve customers, add scale to bring innovation to the mobile media and Internet of Things (IoT) markets, and increase dividends for a 10th consecutive year.” source: Verizon statement

Mobile Subs & Revenue Growth Converging

Source: GSMAi presentation

Cellular Versus Non-Cellular Connectivity

Source: GSMAi presentation

The Rising Cost of Making iPhones

Source: Statista

China Telecom Accelerates

China Telecom reported a 7% year-on-year increase in operating revenue for the first six months of 2016 to 177 billion Chinese yuan (26.5 billion US dollars). That compares with growth of just 2% across 2015. China Telecom attributed the rise to rapid growth in 4G and fiber subscriptions. The telco also reported a 303% increase in Internet of Things connections, but didn't give any absolute numbers. source: China Telecom presentation

4G Revitalises China Mobile

China Mobile reported a 6.9% increase in service revenue to 325 billion Chinese yuan (49 billion US dollars) for the six months to June 30th. In 2015, service revenue fell 1.2%. The operator attributed the increase to rapid adoption of 4G. It expects to have more than 500 million 4G customers and 1.4 million 4G base stations by the end of 2016, up from 429 million and 1.32 million at the end of June. source: China Mobile presentation

Tech in the Ascendent

Source: Statista

DOCOMO Maintains New Momentum

NTT DOCOMO reported a 3% year-on-year increase in operating revenues for the quarter ending June 30th to 1.11 trillion Japanese yen (10.8 billion US dollars).  In the year ending March 31, revenues were up 3.3%. The leading Japanese operator said that revenues in its Smart Life business, which includes digital content and commerce services, rose 6% in the quarter ending June 30 to 125 billion yen (1.22 billion dollars). source: DOCOMO presentation

Amazon Sees Slight Slowdown Ahead

Amazon reported a 31% year-on-year increase in net sales to 30.4 billion US dollars in the second quarter. On an constant currency basis, sales were up 30%. In North America, sales were up 28%, while international sales rose 30% and Amazon Web Sales' revenues leapt 58%.

Amazon forecast that net sales will grow between 22% and 32% in the current quarter to between 31 billion and 33.5 billion dollars. source: Amazon statement

Google Sustains Serious Growth

Alphabet, the company formerly known as Google, reported a 25% year-on-year increase in revenues in the second quarter to 21.5 billion US dollars on a constant currency basis. That compares with 23% growth in the previous quarter. Alphabet said that aggregate paid clicks on the adverts it brokers were up 29%, but the average price per click fell 7%. source: Alphabet statement

AT&T's Core Revenues Under Pressure

AT&T reported a 6% year-on-year decline in revenues in its consumer mobility division for the second quarter, while is business solutions revenues also fell. But entertainment and international revenues rose rapidly on the back of acquisitions. Although AT&T said it continues to see rapid mobile data traffic growth, it is cutting its capital intensity. source: AT&T statements

Mexico Pulls Down América Móvil

América Móvil, one of Latin America's leading telcos, reported that second quarter revenues fell 2.1% year-on-year at constant exchange rates to 233 billion Mexican pesos (12.3 billion US dollars).  The telco said: "Substantially all our operations maintained their growth trends in local currency terms. In Mexico, however, we saw a step down in revenues brought about mostly by more aggressive commercial plans in the pre-paid segment as a greater part of our subscribers moved towards unlimited call plans." source: América Móvil statement

Facebook's Growth Accelerates

Facebook reported a 59% year-on-year rise in revenue in the second quarter to 6.44 billion US dollars, fuelled by a 63% leap in advertising revenues. Revenue growth in the first quarter was 52%. In June 2016, daily active users were up 17% year-on-year to 1.13 billion.

Facebook said that its Messenger service, which it is now seeking to monetise, hosts one billion "organic interactions" between businesses and consumers each month.  It also claimed that people are conducting two billion searches a day across the 2.5 trillion posts in its network. The social network also noted that more than four million 360 degree photos have been shared on Facebook since the launch of this service in the second quarter. It added that one million more are now being shared every week. source: Facebook presentation and transcript

Apple's Top Line Sinks Again

Apple reported a 15% year-on-year decline in revenue for the quarter ending June 25th to 42.4 billion US dollars. It said that iPhone revenues were down 23% to 24 billion dollars, but services revenues climbed 19% to almost 6 billion dollars.

Apple forecast revenues of between 45.5 billion and 47.5 billion dollars for the current quarter, which would represent a decline of between 8% and 11% from the 51.5 billion dollars it reported for the equivalent quarter last year. Source: Apple statement

Digital TV Helps Drive Bharti Onwards and Upwards

Bharti Airtel reported a 8.4% year-on-year increase in revenues "on an underlying basis" to 255 billion Indian rupees (3.8 billion US dollars) for the quarter ending June 30th. In the previous quarter, growth was 10.1%.

The multinational operator said that revenues in India rose 10.3%, while growth in Africa was 3.8% on an underlying basis. In India, Bharti's mobile revenues rose 9.1%, while "homes" (DSL) revenue was up 11%, digital TV up 22% and Airtel Business 10.4%. source: Bharti statement

Verizon Continues in Reverse

Verizon Communications reported a 3.5% year-on-year decline in operating revenues in the second quarter 2016 to 30.5 billion dollars on a like-for-like basis. That was a sharper fall than in the first quarter when revenues fell 1.5%. Verizon said its total wireless revenues fell 4% to 21.7 billion dollars, as "more customers continued to choose unsubsidised device payment plans."  However, Verizon said new revenue streams from Internet of Things continue to grow, with revenues of approximately 205 million dollars in the quarter, a year-on-year increase of about 25%. Source: Verizon presentation

Telenor Lowers Sales Targets

Telenor, which has operations in Europe and Asia, lowered its sales growth target for 2016 to between 1% and 2% on an organic basis, from its previous target of 2% to 4%. It also said its capex/sales ratio would be about 17%, at the low end of its original forecast of 17%-19%.

For the second quarter, Telenor reported organic sales growth of 0.6% to 32.5 billion Norwegian krone (3.82 billion US dollars). source: Telenor presentation 

Ericsson Suffers Further Slowdown

Ericsson reported a 7% year-on-year decline in sales in the second quarter on a like-for-like basis to 54.1 billion Swedish kroner (6.3 billion US dollars). Sales fell 1% in the first quarter on the same basis.

The Stockholm-based company said that "mobile broadband sales continued to decline, particularly in markets impacted by a weak macro-economic environment such as Brazil, Russia and the Middle East." source: Ericsson statement

Most Downloaded Apps in May

Source: Statista

Sales of Vodafone's Own-brand Devices Top 85 Million

Vodafone Group revealed that it has sold more than 85 million own-brand devices since it first moved into this market in 2006. The Vodafone Devices range now includes 3G and 4G smartphones, tablets, mobile data products and broadband routers. Launching a new high-end handset with a biometric fingerprint reader, the Smart platinum 7, Vodafone said it is also rolling out its first virtual reality headset. source: Vodafone statement

China's Massive Spending on Infrastructure

Source: McKinsey via Bloomberg article

Alibaba Sees Sales Growth Accelerating

Alibaba Group predicted its sales will rise at least 48% in the year ending March 2017 as it pushes into new markets and businesses beyond e-commerce, according to a report by Bloomberg.

Stripping out the impact of the recent acquisitions of e-commerce group Lazada and streaming video service Youku Tudou, sales are on course to rise more than 36% in this fiscal year, CFO Maggie Wu told investors. That is up from 33% growth the previous year. source: Bloomberg article

Apple Has Paid Out $50 billion to Developers

Apple said its App Store now offers two million apps, which have been downloaded 130 billion times. The device maker also claimed that there are now 13 million registered developers building for Apple’s platforms, an increase of two million in the past year, and that it has paid out a total of 50 billion US dollars directly to developers. source: Mobile World Live article

Announcing a new iPhone operating system (iOS 10), Apple revealed that Messages is the most frequently used iOS app. It said that "iOS 10 brings the power of the App Store to Messages, opening up new opportunities for developers to create fun new ways for users to communicate in a thread, including stickers to be peeled and pasted into conversations, the ability to quickly personalise GIFs or edit photos, send payments or schedule dinner or a movie, all from within Messages." source: Apple statement

Vodafone Europe Shows Signs of Life

Vodafone reported a 1.8% year-on-year underlying increase in service revenues for the quarter ending March 31, compared with 1.5% for the full year to March 31. The growth was driven primarily by a strong performance in Africa, India and Eastern Europe. Total revenue for the financial year was 41 billion pounds (59.3 billion US dollars).

Vittorio Colao, group CEO, commented: "This has been a year of strong execution for the group, returning to organic growth in both revenue and EBITDA for the first time since 2008. We achieved the first quarter of positive revenue growth in Europe since December 2010, while growth in AMAP accelerated with strong performance in South Africa, Turkey and Egypt."

Vodafone reported that its 4G networks now cover 87% of the population in its European markets, having invested 47 billion pounds over the past three years in capital equipment, spectrum and acquisitions. source: Vodafone statement

T-Mobile USA Lifts Telekom Again

Deutsche Telekom reported a 4.8% year-on-year increase in revenue in organic terms for the first quarter to 17.6 billion euros. In Germany, revenues were down 2.5%, but sales climbed 10.9% in the US thanks to another sharp increase in customers. source: Deutsche Telekom presentation

Amazon Forecasts Another Strong Quarter

Amazon forecast a year-on-year increase of between 21% and 32% in net sales in the second quarter to between 28 billion and 30.5 billion US dollars. In the first quarter, net sales increased 28% to 29.1 billion dollars. Excluding the unfavourable impact of exchange rate movements, net sales increased 29% year-on-year, Amazon said.

Sales for Amazon Web Services rose 64% year-on-year to 2.6 billion dollars for the first quarter. But Jeff Bezos, founder and CEO of Amazon.com, talked up the sales of the company's own range of devices. “Amazon devices are the top selling products on Amazon, and customers purchased more than twice as many Fire tablets than first quarter last year,” he said. “Earlier this week, the $39 Fire TV Stick became the first product ever — from any manufacturer — to pass 100,000 customer reviews, including over 62,000 5 star reviews, also more than any other product ever sold on Amazon. Echo too is off to an incredible start, and we can’t yet manage to keep it in stock despite all efforts.” source: Amazon presentation

Digital Services Lift Telefónica

Telefónica reported revenues of 10.8 billion euros for the first quarter, up 3.4% on an organic basis, driven by 11.3% growth at Telefónica Hispanoamérica and 2.1% growth at Telefónica España. Excluding the impact of regulation, revenues would have increased by 4.4% organic year-on-year, Telefónica said.

The Madrid-based group reported a 19% year-on-year increase in digital services revenue to 1.06 billion euros in the quarter, fuelled by its expanding pay TV business. source: Telefónica presentation

Facebook Continues Rapid Growth

Facebook reported a 52% year-on-year increase in revenues to 5.38 billion US dollars in the first quarter, as the number of daily active users climbed 16% year-on-year to reach 1.09 billion in March 2016. The social network said that mobile advertising revenue represented approximately 82% of advertising revenue for the first quarter of 2016, up from 73% in the first quarter of 2015. source: Facebook statement

Apple Goes Into Reverse

Source: Statista

Apple reported a 13% year-on-year decline in revenue for the quarter ending March 26th to 50.6 billion US dollars, as iPhone revenue fell 18% to 32.9 billion dollars. The decline in Apple's top line was the first since 2003.

Apple forecast its revenue in the current quarter will be between 41 billion and 43 billion dollars. That would represent a year-on-year decline of between 13% and 17% on the 49.6 billion dollars in the same quarter last year.

Apple's services revenue was the only real bright spot with service revenue rising 20% to almost 6 billion dollars. “Our team executed extremely well in the face of strong macroeconomic headwinds,” said Tim Cook, Apple’s CEO. “We are very happy with the continued strong growth in revenue from services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

Apple also announced an increase of 50 billion dollars to its program to return capital to shareholders. Under the expanded program, Apple plans to spend a cumulative total of 250 billion dollars of cash by the end of March 2018. source: Apple statement

AT&T's Wireless Business Under Pressure

AT&T reported a 1.3% fall in total wireless revenues to 18 billion US dollars in the first quarter, due to decreases in equipment revenue. Wireless service revenues of 14.8 billion dollars were flat year-on-year reflecting continued growth of smartphones and tablets. Total revenues leapt 24% to 40.5 billion dollars primarily due to the acquisition of DIRECTV.  source: AT&T statement

Orange Continues Edging Upwards

Orange reported a 0.6% increase in revenues for the first quarter to 10 billion euros, following a rise of 0.1% in the 4th quarter of 2015 and 0.5% in the 3rd quarter (on a comparable basis). The growth was fuelled by a stronger performance in Spain, Belgium and in the enterprise division.

Stéphane Richard, CEO of the Orange Group, said: "In Europe, we doubled the number of our 4G customers in just one year, reaching 20 million. We also reaffirmed our status as the leading fibre operator in Europe where we more than doubled the number of fibre customers to in excess of 2.2 million, principally driven by France and Spain with the successful integration of Jazztel. During the quarter, we also continued the development of our operations in Africa by becoming an operator in Liberia, consolidating our presence in the Democratic Republic of the Congo and investing in Africa Internet Group, the e-commerce leader on the continent.

"Very recently, we laid the foundations for our future mobile banking services by signing an agreement that will allow us to take a stake of 65% in Groupama Banque, which will become Orange Bank." source: Orange presentation

Google Sees Big Leap in Paid Clicks

Alphabet, the company formerly known as Google, reported a 23% year-on-year increase in revenues to 20.26 billion US dollars for the first quarter on a constant currency basis. That's down one percentage point on the previous quarter.

The aggregate cost per click (the average unit price Google's customers pay for advertising) was down 9% year-on-year, but flat quarter-on-quarter. Paid clicks on Google's web sites leapt 38% year-on-year. source: Google statement

Verizon Sees Sales Stumble

Verizon reported a 1.5% year-on-year decline in revenues on a like-for-like basis in the first quarter - a dramatic turnaround from the growth reported in recent years. Including the contribution of AOL, which was not part of Verizon a year ago, total operating revenues rose 0.6% to 32.2 billion US dollars. Verizon said AOL had its highest first-quarter revenues in the past five years.

Verizon's wireless revenues fell 1.5% to 22 billion dollars, "as more customers continued to choose unsubsidised device payment plans," the telco said.

“Verizon’s strong first-quarter results demonstrate our capacity to compete effectively, while executing on our plan of continued network leadership and seeding new growth markets in mobile video and the Internet of Things,” said CEO Lowell McAdam. Verizon added that IoT (Internet of Things) revenues grew 25% year-on-year to approximately 195 million dollars in  the first quarter. source: Verizon statement

Verizon's push into entertainment is analysed in my new report for STL Partners: Can Telcos Entertain You?

Netflix Forecasts Slight Acceleration

Global video-on-demand service Netflix forecast it will generate revenues of 1.96 billion US dollars from streaming in the current quarter, which would amount to a year-on-year increase of 33%. In the first quarter, revenues rose 29.5% to 1.81 billion dollars. In the second quarter, Netflix expects to add 2.5 million members with 0.5 million in the US and 2.0 million internationally (versus prior year 2.4 million).

Netflix said: "Performance in the [first] quarter benefited from the launch of several series, including Making a Murderer (a late December debut), Fuller House (February), House of Cards Season 4 (March) and Daredevil Season 2 (March), complemented by a diverse mix of new films, documentaries, series and kids shows available globally." source: Netflix statement

My new report on how BT, Telefonica and Verizon are trying to compete with Netflix, YouTube, Facebook and other global entertainment platforms is available here.

Huawei Rides High on 4G Network and Smartphone Sales

Leading telecoms equipment maker Huawei said its revenue rose 37% in 2015 to 395 billion Chinese yuan (60.8 billion US dollars).

The company said its Carrier business group generated 232.3 billion yuan (35.8 billion dollars), up 21%, fuelled by widespread rollout of 4G networks. The Enterprise business group reported 27.6 billion yuan in annual revenue, an increase of 44% driven by "rapid growth in the public safety, finance, transportation, and energy sectors."

Finally, the Consumer business group reported revenue of 129.1 billion yuan (19.9 billion dollars), up 73%. Huawei said: "This increase was a direct result of increased demand for high-quality products that deliver a premium user experience, as well as Huawei's growing influence as a consumer brand."

In 2015, Huawei invested 15% of its annual revenue – 59.6 billion yuan (9.2 billion dollars) – in research and development. source: Huawei statement

New Revenues Lift China Telecom

China Telecom reported a 2.1% increase in revenue for 2015 to 331 billion Chinese yuan (51 billion US dollars), fuelled by a 20% increase in "emerging business" revenue to 101 billion yuan. China Telecom categories emerging businesses as "data traffic operation, IT and Internet applications".

In revenue terms, China Telecom is about half the size of rival China Mobile, but it has been spending an extraordinary 33% of revenue on capex as it rolls out 4G and fibre networks (compared with 29% for China Mobile). In 2016, China Telecom plans to reduce capital spending by 11% to 97 billion yuan. source: China Telecom presentation

China Mobile Signals Spending Slowdown

China Mobile reported a 2.6% increase in revenues for 2015 to 668 billion Chinese yuan (103 billion US dollars), driven in part by rising usage of its expanding 4G network. However, telecoms service revenues slipped 1%, as voice and SMS traffic continued to decline.

Claiming to be the largest 4G operator in the world, China Mobile said it had 312 million 4G customers at the end of 2015, up from 90 million at the end of 2014. The telco plans to cut capex to 186 billion yuan in 2016, down from 196 billion yuan in 2015. Source: China Mobile statement

Performance-Related Advertising Lifts Tencent

Chinese Internet group Tencent reported a 30% increase in revenues for 2015 to 102.86 billion Chinese yuan (15.84 billion US dollars). In the fourth quarter, revenues were up 45% year-on-year, boosted by a 118% rise in online advertising revenues to 5.7 billion yuan. Tencent said that performance-based advertising revenues increased by 157% to 2.92 billion yuan, "mainly reflecting revenue growth from Mobile Qzone and Weixin Official Accounts, as well as contributions from newly launched advertising service on Weixin Moments."

Tencent added that the combined monthly active users of the Weixin and WeChat messaging services reached 697 million at the end of 2015, representing annual growth of 39%. "Official Accounts became a leading platform connecting users to content creators, merchants and advertisers," it added. "Weixin Pay also became increasingly popular. The volume of red envelopes exchanged via Weixin Pay exceeded 32 billion within six days during the Lunar New Year holidays in early 2016, growing by 9 times year-on-year." source: Tencent statement

For more on Weixin/WeChat and the rise of conversational commerce, see my recent report for STL Partners.

LTE Infrastructure Market Peaks

The global macrocell mobile infrastructure market grew 3% year-on-year in the fourth quarter of 2015 to 13 billion US dollars, fuelled by LTE rollouts in China and India, according to IHS Technology. But the LTE market will begin to decline this year, as Chinese and European telcos complete their LTE deployments, the research firm said. 

Ericsson led the global wireless infrastructure market for 2G, 3G and 4G gear in 2015, according to IHS, followed by Huawei, Nokia Networks, ZTE and Alcatel-Lucent. The worldwide macrocell infrastructure market was worth 48 billion dollars last year, the research firm added. source: FierceWireless article

The US Leads Race to Connect the Car

Source: Statista

MTN Heralds Mobile Commerce Growth

MTN said its mobile money customer base increased by 56% in 2015 to 34.7 million across 15 countries. The Pan-Africa and Middle East telecoms group added: "In the year, the focus was on the migration of the MTN Mobile Money platform to a more agile platform enabling converged campaigns and incentives, establishing dedicated functions across operations and providing niche services where MTN has a competitive advantage. MTN Mobile Money revenue increased by 55.8% and it now accounts for 16.8% of Uganda’s total revenue and 6% and 6.2% of each of Ghana and Rwanda’s total revenues respectively."

MTN also said AIH and MEIH, its e-commerce joint ventures, now offer a range of Internet services including e-commerce retailing, as well as market place, taxi, travel, classified and food delivery services. "AIH has 10 company verticals in over 23 countries in Africa that are market leaders and recorded approximately 2.3 million customers and 4.4 million transactions in the year.," MTN said. "Jumia is now the #1 online shopping mall in 12 markets in Africa while Lamudi is the #1 real estate classified in 21 countries across Africa. In addition, MEIH has seven company verticals including Wadi, an online shopping retailer delivering a premium online shopping experience in the Middle East."

MTN also claimed to have become the largest distributor of music in Africa and to have more than 800 companies providing 5,500 content services under the lifestyle offering. source: MTN statement

Telefónica Sees Opportunities Aplenty

Telefónica forecast that group revenue will rise by more than 4% in 2016 and that capex will account for 17% of sales - a similar figure to 2015. For the fourth quarter of 2015, Telefónica reported organic year-on-year growth of 3.3% to 11.9 billion euros, lower than the organic growth rate for the year of 4%.

In Latin America, a key growth engine for the group, organic revenue growth slowed slightly to 3.4% in Brazil in the fourth quarter and 8.1% elsewhere in the region. Telefónica said that revenue from digital services (such as video, cloud and M2M) rose 15% year-on-year to 1.07 billion euros, compared with 24% for the year as a whole.

César Alierta, executive chairman, said: "The Digitalisation of the economy is now a reality which is already bringing about significant changes in society; changes that will accelerate in the next years. The growth of connections, data traffic and innovation is going to be exponential and is going to translate into real improvements in terms of productivity, employment and economic growth and, ultimately, into important social progress. The telecom sector is at the centre of that revolution, however new skills are required to capture its full potential.

We must adapt the commercial offering in order to satisfy the growing needs of our customers, characterised by increasingly higher data consumption (data traffic increased by 40% in 2015 and mobile data traffic by 48%, boosted by video usage). In this respect, in 2015, our fibre customers increased by 30%, LTE customers tripled, smartphones advanced by 29% and pay TV by 12%. This translated into higher value customers, both in terms of higher average revenue per access and increasing loyalty, and, therefore, into revenue growth acceleration to 4.0% organic in 2015.

In 2016 growth and data monetisation will accelerate, while we maximise the efficiencies from integration and simplification, and we boost our innovation and big data capabilities. We expect that all of this will be reflected in improvements in the key financial figures: revenue growth higher than 4%, margins stabilising while we maintain strong levels of investment, recover full-cash dividend payment (75 cents per share) and strengthen financial flexibility." source: Telefónica statement

Deutsche Telekom Plans Sales and Capex Growth

Deutsche Telekom forecast an increase in revenues in 2016 following a rise of 10.5% in 2015 to 69.2 billion euros. In organic terms (i.e., adjusted for exchange rate effects and changes in the composition of the Group) revenue increased by 3% last year.

In the fourth quarter, however, revenues in Germany slipped 1.1% year-on-year to 5.7 billion euros, dragged down by a 1.6% decline in fixed-line revenues. Although broadband revenues rose, the group continued to see a decline in telephony revenues. In the U.S., revenues rose 1.2% year-on-year to 8.2 billion US dollars in the fourth quarter.

Deutsche Telekom expects to increase group capex to 11.2 billion euros in 2016, up from 10.8 billion euros last year. The Bonn-based company said: "The core element is the build-out of the network infrastructure in terms of population coverage and increased transmission bandwidths. In addition, the switching to a consistent, IP-based infrastructure is being driven forward in Germany and the integrated subsidiaries in Europe." source: Deutsche Telekom statement