VMED O2 UK Ltd.

Overview Key strengths Key risks Broadband network speed advantage compared with very high bit rate digital subscriber line (VDSL). Intense competition, especially at the lower end of the market. Premium positioning and pricing compared with alternative fixed and mobile telecom players, which supports solid profit margins. Increased fiber-to-the-premises investments by BT that will gradually reduce VMED?s competitive advantage. Convergent premium offers that provide scope to increase revenue and reduce customer attrition.Merger cost synergies that could further improve profit margins. Limited cash flow conversion, due to fixed network expansion and expected 5G and fiber to the premises (FTTP) investments.Aggressive financial policy that is likely to limit deleveraging. S&P Global Ratings expects VMED O2 to transition back to revenue growth in 2022,

...VMED O2 has positive medium-term revenue prospects related to market and convergence benefits. S&P Global Ratings expects VMED O2 to transition back to revenue growth in 2022, supported by several factors. These include reduced pressure on the average revenue per user (ARPU) from end-of-contract notifications, since existing customers have already gone through the initial notification and downward repricing process. In addition, we see some recovery in roaming revenue as travel, including for business, gradually resumes. We expect price increases to help offset promotional pricing pressure in the market. We see scope for cross-...

Full Report