Telkom mobile’s alarming ARPU

Telkom revealed that the blended average revenue per user (ARPU) for its mobile arm, 8ta, was almost half of its rival, Vodacom when it published its results on Monday (19 November).

While Telkom bemoaned lower fixed-line revenue for a 48.9% drop in group profit before tax of R547 million for the six months ended September 2012, 8ta only added 551,000 new revenue-generating subscribers to total 1.495 million, from 944,000 in September 2011.

Telkom reported a marginal decline in revenue for the six months ended September 2012, but an 80.6% decline in headline earnings per share to 37.2 cents.

Mobile revenue increased 198.3% to R898 million, while 8ta reported an ebitda loss of R587 million, down from R1.066 billion before.

Telkom highlighted active mobile subscribers of 1.495 million, a 2.2% market share in SA (0.9% September 2011), with a blended ARPU of R68.62.

Pre-paid subscribers improved 52.4% to 1.122 million over the reporting period, and post-paid subscribers increased 45% to 373,116.

Pre-paid ARPU improved marginally, by 3.4% to R23.12, while post-paid ARPU declined 40.8% to R169.30.

Telkom said that churn for pre-paid customers rose to 52%, from 41% in 2011, with Telkom’s executives attributing the increase to the ongoing price war in the mobile space, with customer’s showing “no loyalty” to operators in the pre-paid segment.

In contrast, rival operator Vodacom recently announced a 21.9% rise in active customers for South Africa in results for the six months ended September 2012, to 30.8 million.

Vodacom recorded blended ARPU of R127, but did note that this was down 21.1% due to the higher prevalence of lower usage customers, a reduction in MTRs and lower out of bundle spend from customer.

Vodacom’s churn in SA was at 42.4%, higher than 40.2% in 2011, but well below 62.2% in 2010.

Vodacom reported pre-paid ARPU of R73, and contract ARPU of R334.

MTN, meanwhile, in interim results reported in August, reported blended ARPU of R123 with post-paid at R265 and prepaid at R92.

In a quarterly update in October, MTN said that blended ARPU remained stable at R121.25

“Prepaid ARPU showed an upward trend as minutes of use improved from lower tariffs and positive elasticity while post-paid ARPU continued to decline due to lower ‘out of bundle’ spend and a high volume of telemetry SIMS,” it said.

According to investment analysts at First Avenue Investment Management, Cell C’s blended ARPU is approximately R93.

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Telkom mobile’s alarming ARPU