Wednesday, April 12, 2017

Combining Telenet/Base and VodafoneZiggo could bring the Vodafone brand to Belgium

Liberty Global has recently made some public statements about its strategy. The integration of the Dutch activities was not discussed. It must be the worry of the VodafoneZiggo joint venture. However, a scenario is conceivable in which Liberty Global pulls in the JV. That could lead to a merger with Telenet / Base, with a stock market listing to boot.

Content and network

With regard to content, Liberty Global gives preference to a large portfolio, supplemented with local content for the purpose of differentiation. Besides FTA (free-to-air) the emphasis is on sports, production and OTT. In addition, Liberty Global, believes (given a world of abundant content), in the concept of 'attention economics'. Focus is on the consumer's attention. It is important to capture it with good content, and a good interface. As for networks, the company is working on DOCSIS 3.1 and the assumption is that a connection speed of 500-750 Mb/s justifies an increase of 10 to 15 €/month. Other technologies have the attention, including 5G (for backhaul, not for the possible replacement of the local loop.


The company's structure is also getting ample attention. Latin America is split off into the LiLAC stock, while the Netherlands is a deconsolidated joint venture and Belgium has its own listing. In some countries there is a merger with a mobile operator (Belgium, Netherlands), in others an MVNO is created. The UK and Ireland merged into Virgin Media and Switzerland and Austria combined into UPC Central Europe. Combination of the Netherlands and Belgium in a new entity on paper also has benefits. There will be more scale, there may be savings in overhead and there is some synergy in the fields of content and networks. It could lead to the creation of a pan-Benelux operator.

This scenario offers some interesting additional features:
  • The brand portfolio can be streamlined. In both countries, the situation is sub-optimal. Belgium has the brands Telenet and Base, the Netherlands has Ziggo and Vodafone. It could be streamlined in one clean sweep.
  • In agreement with Vodafone, the Vodafone brand could be launched in Belgium. If not as the main brand, then as a mobile brand.
  • The Telenet stock market listing can be maintained and VodafoneZiggo might be gobbled up. The Benelux activity as a whole would have a listing, which could offer the parent companies an exit strategy, over time. Or either of them could take full control.

Friday, March 24, 2017

Breaking down Amazon's revenues (2)

Here are the absolute numbers for Amazon's 8 revenue lines.
Note: indicative.
Note: from 14Q1 to 16Q4 Prime grew from ~$600m to ~$1.8b.

revenue contribution (%)03-31-201430-06-201431-03-201530-06-201531-3-201530-6-201530-9-201531-12-201531-3-201630-6-201630-9-201631-12-2016
media: Amazon retail4,3063,7704,0135,3233,9123,4253,7995,2293,9883,5923,8905,216
electronics & other gen merch: Amazon retail10,25210,33310,67815,80711,56011,92312,75818,69114,40515,13915,88122,079
media: 3rd party sellers7356857649968357588831,2011,0299601,0981,459
electronics & other gen merch: 3rd party sellers1,7491,8782,0332,9582,4672,6392,9664,2943,7154,0484,4826,174
Content subscr, Other (ads, cc, other)207213213320234235249303329344372516
Shipping rev8498891,0481,7011,2991,3991,4942,3281,8202,0002,1543,003

Thursday, March 23, 2017

Breaking down Amazon's revenues

Amazon supplies different revenue breakdowns:

On a quarterly basis:

  • Products & Services
  • North America & International & AWS
  • Media & Electronics & Other & AWS
  • Shipping revenues (separately)
On an annual basis:
  • Retail products, Retail 3rd party, Retail subscriptions, AWS & Other
  • US, Germany, UK, Japan & RoW
Note: you have to be very careful about what is included in all these items, specifically Shipping, Prime and AWS.

This is what we found for 14Q1 and 16Q4:

Disregarding geographic distribution, this is our estimate for 8 different revenue contributors, based on very few assumptions. We have estimates on a quarterly basis, going back to 14Q1. Our main findings for the period 14Q1 - 16Q4 on revenue contributions:
  • Retail media (12%): falling
  • Retail electronics (50%): almost flat 
  • 3rd Party media (3%): almost flat
  • 3rd Party electronics (14%): rising
  • AWS (8%): rising
  • Prime (4%): flat to rising
  • Shipping (7%): rising
  • Content subscriptions & other (1%): flat to rising
Note that a stable contribution still implies that growth is in line with Amazon's overall 20+% growth.