It is difficult to give predictions on the mergers and acquisitions market, but we can speculate. Is Iliad eyeing T-Mobile Netherlands? What's Liberty Global's next move? And what is the next prey for Eurofiber? Network modernisation is moving forward with the deployment of 5G, FTTP and Docsis 3.1. In the services market, convergence is the order of the day and FWA may be added as an alternative to fixed. The internationalisation of HBO Max raises the question of what lies ahead for Ziggo Movies & Series.
Corporate: what are Liberty and Eurofiber doing and is T-Mobile NL going to Iliad?
At the corporate level, companies are mainly concerned about mergers and acquisitions, but not only. To begin with, we have seen a number of international operators change hands already in 2020 or earlier. Liberty Global withdrew from various countries and now has a somewhat disjointed portfolio, which also includes joint ventures. Its shares disappeared from the Nasdaq-100 Index this week, but we do not expect the company to dismantle itself. Its somewhat opportunistic strategy could lead to targeted acquisitions in 2021.
The Vodafone Group is no longer a mobile-only operator. The biggest change in 2020 was the creation of Vantage Towers, which owns 68,000 masts from its European subsidiaries. Vantage will go public in 2021. The absence of VodafoneZiggo's Dutch masts is notable. European expansion is probably a given.
A third operator that changed in 2020 is France’s Iliad. The company has expanded to Italy, Ireland and now Poland. The founder/owner has assets in a number of other countries, particularly Switzerland, and in 2020 managed to increase his stake in the company (Iliad) with a very successful offer. Finally, Poland was added with the acquisition of mobile operator Play. T-Mobile Netherlands seems to fit in very well with Play's profile and we can therefore regard the company as a takeover candidate.
At the same time, we see two parties acting as consolidators. In the Netherlands, this is the same T-Mobile NL, which acquired Simpel in 2020 after Orange, Tele2 and Vodafone Thuis. The question is whether there is anything left to satisfy the company's hunger, but Delta Fiber and Eurofiber qualify on paper.
Eurofiber itself has continued with its European expansion. The firm was already active in the Netherlands, Germany and Belgium and added France in 2020. The company’s takeover strategy is certainly not over yet.
Networks: FTTP, Docsis 3.1 and 5G
Network construction is never finished. In mobile, the transition to 5G is taking shape and in fixed, it revolves around FTTP and Docsis 3.1. Follow-up technologies are also already available: 6G is at the research stage after which standardisation will take place. Docsis 4.0 is available for the cable, which can handle a symmetrical 10 Gbps. However, the question is whether Ziggo has this in its sights. With a transition to FTTH, much more value can be created because investors value such lines much more than VDSL or Docsis lines. The XGS-PON standard is emerging on the FTTH market; it is also suitable for 10/10 Gbps.
In addition to KPN and a number of local parties, it is mainly Delta Fiber, Primevest and E-Fiber that are deploying FTTP. They want to use gentle coercion to bind KPN as a wholesale customer. The question, however, is whether this will work, because KPN seems to prefer completely converting its network to fibre. In so doing, it is warning other parties, in addition to Delta, Primevest and E-Fiber, not to enter the market. KPN has a number of wholesale contracts with local fibre networks and for 2021 the question is whether this will be expanded to Primevest and E-Fiber.
Ziggo is expected to completely convert its network to Docsis 3.1 by the end of 2021 and to therefore provide 1 Gbps almost nationwide. However, the question is whether this timeline is feasible.
In 2020, the three MNOs launched 5G. Vodafone was the first and uses the 1800 MHz band for 5G, where it shares space with 4G via dynamic spectrum sharing (DSS). T-Mobile NL is currently putting 5G in the mobility market and KPN is adding focus to the business market with three services that provide guaranteed bandwidth, among other offerings. For 2021, the main question is what Vodafone will do with its newly acquired licenses before the auction takes place for the 3.5 GHz band in early 2022.
Services: unlimited, FMC and possibly FWA
Mobile services have been characterised by declining ARPUs in recent years. With 5G, traffic will continue to increase and the hope is that more subscribers will move to (not cheap) unlimited subscriptions. This could cause a trend reversal. On the fixed market, we see price increases every year due to limited competitive pressure. KPN and Ziggo are largely in charge because all other parties are dependent on KPN Wholesale and therefore have limited room to maneuver their prices.
FMC (fixed-mobile convergence), the one-stop shop for all services, continues to dominate the market. Vodafone still has room to grow, but saturation seems to be hitting KPN. This could lead to a greater interest in mobile-only or broadband-only services.
FWA (fixed-wireless access) has been a theoretical alternative to the fixed line for many years, but with 3G and 4G, the technology has not been able to gain solid ground. 5G offers more technical possibilities (higher bandwidth, more stability) but the consensus is still that FWA-over-5G does not really stand a chance against FTTH and Docsis 3.1. Still, there is an argument for this system. After all, if the network is in place and the technology works, why not offer the service? Addresses without fast internet are especially eligible, but a combination with mobile phones (two Sim cards) could perhaps provide a nice proposition nationwide.
Content: all eyes on HBO Max and Ziggo
The advance of streaming video services is not finished yet. We will in 2021 welcome Paramount+ and Discovery+, although the launches will initially mainly concern the US market. Existing services such as Peacock and HBO Max will go international and the question is when they will visit the Netherlands. HBO Max is an interesting case because the content is playing on Ziggo Movies & Series. Will Ziggo get a contract extension or will HBO Max come to our country itself?
Sports rights are also a sensitive subject, although Ziggo Sport seems to have a fairly comfortable position here that does not depend only (like Fox Sports=ESPN) on the Eredivisie. However, Amazon as a competitor for major events must be taken into account.
The US film world is currently in turmoil with WarnerMedia's announcement to next year put all of its 17 films in theaters and on HBO Max simultaneously. Theater owners and directors are screaming murder and fire but the move could strengthen HBO Max's competitive position.
