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Hot Topic NBR Focus: GMO
Hot Topic NBR Focus: GMO
3 mins to read

Telecom takes massive mobile hit


CDMA closure sees numbers "re-set" to a level 500,000 customers below the time of XT's launch.

Chris Keall
Fri, 24 Aug 2012

TOTAL MOBILE CONNECTIONS

Vodafone: 2.37 million (47.21%)
Telecom:  1.57 million (31.87%)
2degrees: 1 million (19.92%)
TelstraClear/MVNOs: 50,000 (1%)

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Telecom has taken another big hit in mobile customer numbers.

Acting CEO Chris Quin this morning said the company's total number of mobile customers had been "reset" at 1.6 million following the closure of its old CDMA network on July 31. All customers are now on XT.

In February, Telecom reported 1.987 million customers - around 639,000 of whom it said were on CDMA - but that only 300,000 of those were active.

But even allowing for the evaporation of those 300,000 inactives, Telecom has lost 187,000 mobile customers over the past six months. In February, it reported a loss of 180,000.

According to information released by Telecom today, only 63,000 of the 639,000 on CDMA switched to XT over the past six months - despite a range of carrots and sticks waved in their direction.

On a brighter note, it gained 36,000 contract customers in the half, and increased average revenue per user (see below). Prior to the CDMA closure, which took place a month after the end of the financial year, Telecom had lost 32,000 pre-pay customers. Mr Quin said this morning that the total revenue from CDMA was "only $600,000" in the network's last month, generated by 57,000 hold-out customers.

At the time XT was launched in May 2009, Telecom had 2.1 million mobile customers.

Earlier this week, Telecom announced an aggressive new $19/month plan, which seems to be squarely aimed at winning back those who have defected to 2degrees. At the other end of the customer spectrum, Mr Quin has been talking up a 4G trial for business customers.

2degrees recently said it had reached the 1 million customer milestone, with around 100,000 on contract plans.

Vodafone has more-or-less held the line, with only minor mobile customer losses.

More revenue from those remaining
The silver lining for Telecom is that the CDMA closure lowers its number of lower-yielding pre-pay customers, in term boosing its key ARPU (average revenue per user per month) metric.

The company said in a statement this morning:

Mobile ARPU increased by 9.4% to $29.14 in FY12 when compared to $26.64 in FY11.

It also reported a decline in voice revenue but a gain in data - although data price wars mean it slipped backward overall:

While mobile voice revenues declined by $18 million, or 4.3%, in FY12 compared to FY11, this was more than offset by $31 million, or 11.4%, growth in data revenues over the same period. The strong data revenue growth was driven by the increased number of higher value customers acquired and continued acceleration of data use and smartphone penetration.

Telecom's Skinny budget/youth focussed sub-brand gets online one-line of mention, noting it established itself as a pre-pay brand, and no financials or customer numbers [UPDATE: Mr Quin said the number of retail outlets carrying Skinny products would grow from 400 to 800 by the end of the year. The company will not break out any financials or customer numbers for the sub-brand].

The mobile numbers were part of Telecom's broader full-year result which saw it miss estimates in its first post-Chorus report.

At a briefing this morning, Mr Quin said the CDMA closure would save $5 million to $10 million a year, with spectrum also made available for XT.


All carriers count each connection as a "customer", so a person with separate SIM card accounts for, say, a mobile phone, data stick and iPad, counts as three customers. MVNOs or mobile virtual network operators resell service. TelstraClear; easily the largest MVNO, offers a rebadged version of Vodafone's service.

* Vodafone PLC quarterly financial report, May 23 2012
** Telecom full-year financial report, August 24, 2012
*** 2degrees CEO statement June 28, 2012
**** TelstraClear statement May 2012

Chris Keall
Fri, 24 Aug 2012
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Telecom takes massive mobile hit
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