MTN loses subscribers in Home Market. Other Markets perform comparatively better.

MTN connects over 195 million customers in 22 countries, but its home operation of South Africa experienced a 1.9% decline to 24.950 million subscribers from 25.421 million in Q4 2012.

Despite the fall in absolute numbers, MTN managed to maintain market share in South Africa, according to MTN Group President and CEO – Sifiso Dabengwa.

MTN South Africa: Average price per minute (PPM) declined 5.5% compared to the same period a year earlier affecting revenue growth capability. Blended ARPU declined a huge 8.1% to R110.62 as a result of promotional activities and a decline in effective tariffs.

MTN claims that towards the end of the quarter, there had been some signs of improvement in both subscriber and revenue trends. Data revenue is a key focus area for MTN, and active data subscribers stood at 13.3 million, data revenue, including MTN Business and mobile data, increased approximately 15.7 percent Year-on-Year.

MTN Nigeria: Net Additions went up by 3.9 Mn, and increase of 8.1 percent QoQ. Market share rebounded to 49.7 percent. Data subscribers reached 22.8 Mn and Data revenue went up by 63.5 percent YoY. 

Network roll-out progressed rapidly too, with 450 new 2G sites during the quarter compared to 211 in the same period last year, and 259 new co-located 3G sites, bringing the total number of 3G sites to 3,508. 

MTN in other countries:

MTN Ghana: Subscribers went up by 2.5% QoQ, adding 290,000 subscribers. Data subscribers reached 4.1 million and data revenue increased 67.3% YoY.

MTN Irancell: Subscribers went up by 2.6% QoQ. Data subscribers remained stable at 10.1 million at the end of the quarter and data revenue increased 58.6% YoY.

MTN Cameroon: Subscribers went up by by 2.6% QoQ, adding 192,000 subscribers in the period. Data subscribers reached 600,000 at the end of the quarter and data revenue increased 42.9%  YoY.

MTN Ivory Coast: Subscribers went up by 5.8% QoQ, adding 354,000 subscribers, while data subscribers reached 900,000 at the end of the quarter and data revenue increased 41.1% YoY.

MTN Uganda: Subscribers went up by 3.2% QoQ adding 248,000 subscribers. Data subscribers reached 1.2 million at the end of the quarter and data revenue increased 53.6% in YoY.

MTN Syria: Business faces challenging security and other issues. There were net disconnections of 364,000, a 6% decrease QoQ, with both revenue and margins coming under pressure. This is expected to continue unfortunately, according to MTN.

Price War in the Czech Mobile Market at the upper end

A price war is in progress in the Czech mobile market. The line up of cheaper flat-rate mobile tariffs is likely to have further repercussions going forward. A recent line-up of flat-rate calling plans in the recent weeks by T-mobile, O2 and Vodafone will mean that higher ARPU customers in the Czech mobile market stand to benefit.

O2 cut its full flat-rate call plan from 1,900 K? per month until mid-april, to 749 K? “Free CZ” plan for customers signing up for two years.

T-Mobile and Vodafone responded with similar price cuts, and Vodafone has since doubled to 1.2 gigabytes the amount of data offered free to customers of its 691 K?-per-month flat calling plan. It is reported that almost 300,000 people have taken up these offers!

Unlimited call plans
T-Mobile :              1.5GB for 749 K?
Telefónica O2 :   1.0 GB for 749 K?
Vodafone:             1.2 GB for 691 K?

Consumers get a cheaper price, and the operators may see an increase in ARPU. Margins may be lower on these deals, but ARPU could go up. Depending on the profile of users in the country, this could be good or bad news for the operators.

There is a downside to these deals as well, and that of possible cannibalisation of revenue from erstwhile high ARPU users, now migrating to these plans to take advantage of these offers. If price elasticity favours the operators, and there is a broad acceptance of these offers, then this will take the ARPU higher.

Smartphone penetration in the Czech market is still at very low levels (approximately 16%) compared to other markets in Europe this is almost 1/3rd that of markets like Denmark. It is possible that there will be a very strong growth in Feature phone to Smart phone penetration with the introduction of entry level smartphones.

Smartphones with a non-data oriented feature set, like that of the Lumia 520 and other entry level smart phones will greatly help boost smart phone penetration over the next 12-18 months.

Local news agencies in Czech market are reported to have said that Telefonica believes that the interest in these plans is “Phenomenal”, according to Hany Farghali of Telefonica Czech.

The Czech market is likely to see a fourth entrant in the market. The Czech Telecommunication Office is running an auction to award mobile spectrum frequencies for 4G/LTE.

It turns out that a recent MVNO launch, BLESKMobil and other possible MVNO launches may have triggered this price drop, according to some sources. This seems unlikely as longer duration and unlimited plans are not the domain of MVNOs like BLESKMobil, until they plan to go the “Free Mobile” route of the french operator, who came in and single handedly shook the french mobile market.

Virgin Mobile South Africa drops prices. Announces One Two Free plan.

Virgin Mobile announced a new price plan called “1,2,Free”, offering subscribers every third minute, SMS, or megabyte of data free.

Two “1, 2, Free” price plans have been announced: one focused on voice, and the other on SMS and data:

  • Free Talk: every third minute is free every day.
  • Free Surf and Text: every third SMS and every third Megabyte is free every day.

Call rates are 99c per minute, billed on a per second basis, while an SMS/MMS costs 50c each, and data is billed at 99c per mb.

CEO of Virgin Mobile, Jonathan Marchbank, explained that the “Free Talk” plan will be Virgin Mobile’s default pre-paid price plan, but that customers can change to “Free Surf & Text” by dialling *110*6# from their handset.

Subscribers can change price plans for free every 30 days.

“We have been waiting for the price wars to play out before announcing 1,2,Free just to see how low they would go – and then we launched a much simpler and transparent set of offers,” Marchbank said.

Marchbank said – “It’s not a promotion, it’s a core offer”.

Asked why they didn’t bundle the free minutes, texts, and data all together in one plan, Marchbank said that “the economics wouldn’t work” for them.

Further questioned about why they didn’t just cut their prices by a third, Marchbank said that it’s to encourage people to use.

“If you start selling at 66c I’m starting a price war I don’t particularly want to,” Marchbank said, adding that he doesn’t want to win customers only on price, but on brand.

Marchbank explained that if someone switches to Virgin because of the price, they’re easy to lose again.

Wireless Federation refers to these users as “Headless Chickens”. These types of users are more expensive to have on your network and it is better to lose them as their SAC is much higher and retention even more expensive!

30 Billion Dollars stand in the way of the Verizon-Vodafone Deal.

WSJ reports that Verizon’s planned bid for Vodafone’s 45% stake is likely to face a big hurdle, particularly because the apparent difference in their valuation is $30 Billion.

Verizon believes the stake is worth around $100 billion, while Vodafone believes it’s closer to $130 billion.

No formal offer has yet been tabled but Verizon is reported to have hired advisors to help it make an offer to Vodafone.

Verizon is considered to be the crown jewel in the Vodafone asset base. At its current share price Vodafone’s total current market valuation stands at $146 Bn.

The tax bill for the deal is likely to be in the range of $ 5Bn -$25 Bn. The wide range is because of the lack of clarity of the holding structures.

Please watch this space for more on this deal.

Update: Reuters earlier reports on April 27, 2013 that six major shareholders of Vodafone wanted a minimum of $120 Bn.

Telco Big Data: 2013 will be a strategic year for Mobile Operators.

A report by Wireless Federation highlights that 2013 will be the year when a majority of Mobile Operators will start treating Big Data as a strategic priority, for both internal as well as external use.

Internal use will be to boost ARPU,reduce CHURN, curb Fraud among other key use cases. External use will be to generate revenue from Big Data by selling insights to various verticals like Verizon sell insights like Verizon (Precision Market Insights) and Telefonica (Smart Steps).

AT&T labs has also been studying various uses of anonymous mobile usage data or Call Data Records (CDRs) since 2009.  One of them being the ability for city planners to get a better idea of where people work, live etc aiding better planning in the city to help curb traffic jams, plan major events, better public transport systems, provide better security etc.

As far back as 2011, researchers from AT&T labs gathered CDRs from over a million customers, and these CDRs ran into Billions.Users were from LA, SF and NY city primarily. Privacy was of utmost importance and as such antenna locations were used rather than specific phone locations, and the data was made completely anonymous. Findings revealed that residents of Los Angeles travel longer distances than San Francisco, and SF residents travel more than those of Manhattan, BUT the longest trips of Manhattan residents are longer than those of LA residents.

In another study it was revealed that more residents of the North & West parts of Morristown, N.J. attended the St.Patricks day parade in March 2011, compared to the South & East parts. This could potentially help make better traffic arrangements potentially in the future.

This information was earlier available through expensive surveys and infrequent census data. With high mobile penetration rates, it is possible to collect intelligence from Big Data easily now.

The potential of Big Data for Mobile operators holds a key to the falling ARPUs and lower return on Mobile Internet related investments. Operators who don’t leverage this soon, stand to lose out on this large opportunity. Market leaders and first movers will stand to gain more significantly than others.