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Belgacom Shows Good Q4 Customer Growth – But at Some Cost
Published on: 13th March 2008
At the end of 2007, Belgacom remained the market leader in Belgium, but its market share fell to 43.8%, its lowest ever level. The latest quarterly fall of 0.4pp was the 23rd successive quarterly fall, an astonishing run which stretches back to the second quarter of 2002.
Belgacom's mobile business Proximus finished the year with 4.62m active customers, up 7.2% compared to the end of 2006, and although second-placed Mobistar gained a little ground during the year, Belgacom remained over 1m customers ahead of its rival with a lead of 1.13m. Moreover, its yearly growth rate in 2007 was a considerable improvement on the 1.4% recorded in 2006. All of the year's growth was attributable to gains in the contract customer base, which added 348k new connections - a 17.6% uplift, compared to 11.6% in 2006. The prepaid base, meanwhile, recorded its second successive year of net losses, with the year-end prepaid total of 2.25m down 81k compared to the end of 2006. However, for the first time in over two years the prepaid base registered two consecutive quarters of net gains, and this meant the net loss recorded in 2007 was substantially lower than the 149k loss in 2006.
In fact, this was the first quarter since Q2 05 in which both prepaid and contract bases registered net gains, with the contract base adding 85k on a net basis. The total of 98k net additions was the highest for over six years. If we include MVNO Mobisud, which more than tripled its customer base to 41k in the quarter, then the total for Q4 07 amounts to 126k.
Although the above chart might suggest that Belgacom had its best quarter for some time in Q4 07, closer analysis shows that customer growth came at some cost. Gross of credits and discounts, blended ARPU was at its lowest ever quarterly average of ¢â€š¬38.30 per month, a 5.0% decrease compared to Q4 06. This was due to a 15.7% fall in contract ARPU from ¢â€š¬65.10 in Q4 06 to ¢â€š¬54.90 in Q4 07. However, this is not the worst of it. If we examine the ARPU figures net of credits and discounts, then an even gloomier picture emerges: blended ARPU down 10.4% to ¢â€š¬32.60; contract ARPU down ¢â€š¬10 or 16.6% to ¢â€š¬50.30; and prepaid ARPU down 13.1% to ¢â€š¬14.60. All three figures are the lowest ever recorded since Belgacom began quoting quarterly average ARPU's in Q1 05.
What is most significant is the difference between gross and net ARPU's, as this tells us the level of credits and discounts offered by the company. The prepaid discrepancy more than doubled from ¢â€š¬3.20 to ¢â€š¬7.00, pushing the blended figure up 46.2% to ¢â€š¬5.70. Clearly, then, Belgacom has had to offer some generous discounts in order to get the prepaid base moving in the right direction.
A quick glance at the P&L sheet reveals the impact of these credits and discounts. While a ¢â€š¬111m yearly fall in voice revenues was just about compensated for by a ¢â€š¬112m rise in data revenues and ¢â€š¬3m from wholesale and subsidiaries, the line for credits and discounts shows an annual increase of ¢â€š¬86m, leaving total service wireless revenues down ¢â€š¬81m, or 4.0%, to ¢â€š¬1,949m. A marginal increase in operating expenses compounded the problem, leaving OIBDA down 8.8% year on year at ¢â€š¬912m.
Tags: [mobistar] [mvno] [arpu] [proximus] [belgacom] [Belgium]
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