Rumoured Mergers could change the face of UK Telecoms Industry

As we move into 2015 the convergence of laptops, mobiles and TV screens has become an ever increasing trend and now it is the turn of the fragmented UK communications industry.

It has been recently revealed that BT is considering buying the O2 mobile network, and is in the early-stages of talks with the UK's largest mobile network, EE. This comes 13 years after BT themselves sold the company that became O2, and marks a dramatic change in policy, which could spark a string of mergers in the telecoms and media sectors. In this respect the UK is actually slightly behind the rest of Europe, as the concept of a communication supergroups offering everything from Premier League football to internet services, is already established on the continent.

“The horse has bolted out of the stable door,” says Deutsche Bank’s telecoms analyst Robert Grindle. “The market now is going down a convergent route. The competitive forces have been unleashed and things are going to have to shake out.”

This convergence will effect consumers in several ways. Not everyone will want all the services a provider can offer bundled together. However, it is likely that the prices of the services will drop as a result of the bundling and competition. Analysts are forecasting a price drop: BT currently give away its BT Sport channels to customers that take its broadband and could soon be adding discounted mobile connections to that package.

BT’s move back into mobile could also help those waiting for a faster internet connection as competitors retaliate. It is possible their main rivals such as Vodafone and TalkTalk may choose to hit back where BT is strongest, by stepping up investment in their own superfast fibre networks.

All the main mobile and media companies are now considering their options, with so many different providers encroaching on each others lines of business, competition will be fierce and this is likely to benefit the consumer. 

Vodafone appears determined to remain competitive in the bundling arms race, it has bought several broadband and TV operators in Europe, and is laying fibre-optic cables in Spain, Portugal and Ireland. In the UK, they're offering their 20 million customers broadband and a TV set-top box if they want one next spring. Vodafone have said that if BT aquire O2 they're going to move more into consumer broadband. 

For broadband, Vodafone will use the fibre it acquired when it bought the UK network built by Cable & Wireless, which so far has been reserved for business customers. This only covers half of telephone exchanges. To reach homes, it may lay its own fibre, or rent them wholesale from BT. For TV, Vodafone is thought likely to join forces with Sky, distributing the satellite broadcaster’s Now set-top box.

Could this lead to a full-blown corporate wedding? Rupert Murdoch would have to part with his 39% stake in Sky. Analysts at Espirito Santo say Vodafone, currently valued at £60bn, would need £20bn to take full control – a 30% premium to Sky’s current valuation.

The UK Telecoms Industry at a glance:

BT
UK customers: 9.8 million for home broadband and phone
Products: TV, broadband, land line

SKY
UK customers: 11.5 million
Products: TV, broadband, land line

VIRGIN MEDIA
UK customers: 4.9 million
Products: TV, broadband, land line, mobile

TALKTALK
UK customers: 4.2 million
Products: TV, broadband, landline, mobile

EE
UK customers: 25 million
Products: TV, broadband, mobile

O2
UK customers: 22 million
Products: mobile

VODAFONE
UK customers: 20 million
Products: mobile, soon to launch broadband and TV

THREE
UK customers: 8 million
Products: mobile

Oil price is skidding towards $80 a barrel

Brent Crude suffered its biggest financial slump in four years in London yesterday, testing the $80-a-barrel mark.

In June, Brent Crude hit $115 but since then the price has slumped by more than 30%. With a 15% decrease this month alone. The price for December settlement, the forward month contract, fell $1.88, or 1.5 per cent, yesterday to $80.46 a barrel.

Traders are braced for further falls today when the Energy Information Administration, the statistical unit of the US Department of Energy, pub-lishes its inventory update, which is expected to show that stockpiles rose by more than 250,000 barrels last week.

Falling crude prices have had little impact on shale oil drilling in the United States, with output from the largest shale fields showing no sign of slowing. Yet if prices fall much farther, production will become less viable because of the high cost of extraction.

Other factors weighing on the energy market include concerns that Opec appears unable to settle on a united plan to cut production that would stop the plunge in crude prices.

The oil producers’ cartel, which will meet in Vienna this month, supplied 31 million barrels a day last month, more than 3 per cent above its target of 30 million barrels, adding to global stockpiles when growth in the big oil consuming nations appears to be slowing. On Monday analysts at JP Morgan slashed its Brent price forecast for 2015 by $33 to $82 per barrel.

According to Opec’s own estimates its share of the global oil market could shrink to 37 per cent in 2017 from 40 per cent last year. That would be the lowest in more than 25 years and far below its peak of 54 per cent in 1973.

Meanwhile, the loading dates of at least four cargoes of Forties crude, the largest of the four North Sea streams that underpin the Brent oil benchmark, have been delayed amid lower-than-expected production. Fifty oilfields are connected to the Forties pipeline.

Ofcom finds 4G Twice As Fast As 3G

4G speeds in the UK are more than double the speed of 3G, according to new data from Ofcom. The average speed was found to be 15.1mbps, 3G averaged 6.1mbps.

Data was collected from mobile networks in five major cities in the UK including London, Birmingham, Glasgow, Manchester and Edinburgh.

London came top of the speed league table for 4G, but was actually the slowest for 3G. Load times were fairly consistent across networks, with Three coming out on top.

Wages To Outpace Inflation By End of 2015

The Bank of England has declared that wages are set to rise significantly faster inflation by the end of 2015. This will mark the end of the longest pinch on living standards in recent times.

Governor of Bank Of England, Mark Carney said in September: “We are seeing the start of real pay growth. We expect this pick-up to accelerate. It’s a welcome development.”

Since the start of 2008 average earnings in the UK have fallen by 7.5 per cent, although accounting for inflation they are no higher than in 2003. Many have felt the squeeze as a result of this despite modest recovery on paper.