India's Mtnl - Customer Growth Slows but Revenues Rise

MTNL's Q4 2007 Results reveal a 16.1% rise in annual cellular revenues and a 22.0% annual increase in customer numbers. Having broken through the 3m barrier in November, MTNL finished the year with 3.10m connections in the two territories in which it operates (Delhi and Mumbai), up from 2.54m at the end of 2006. The latest figures from the Indian regulator reveal that the customer base rose to 3.27m at the end of February.

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Customers (000) vs Proportionate Growth (%)

Fourth quarter net additions of 187.3m represented a 12.2% increase on Q4 06, although on an annual basis the figure of 559k net additions recorded in 2007 was down quite considerably on the 885k in 2006.

The loss of 288k subscribers in Delhi in April 2007 was certainly one factor behind the slowdown, but even without this one-off decline, growth would have been considerably below the 53.6% recorded in 2006. On a quarterly basis, Q4 07 growth was down not only compared to Q4 06, but also compared to Q3 07.

As the discrepancy between the growth in revenue and the growth in the customer base suggests, ARPU fell compared to 2006. In fact, both contract and prepaid ARPU in Q4 07 dropped by more than 10% compared to Q4 06, with contract ARPU down 15.5% to Rs. 256 per month and prepaid down 12.3% to Rs. 178 per month. However, fourth-quarter mobile revenues grew to Rs. 2,251m, up 13.8% compared to Q4 06 on the back of growth to the customer base, and although fourth-quarter mobile profit (before tax and interest) was down 9.7% to Rs. 684m, this was far smaller than the 34.8% decline in total profits for Q4 07.

On an annual basis, total revenues were down 4.7% and profits down 22.8%, but the mobile segment bucked this trend with a 16.1% rise in revenues to Rs. 6,603m and an 11.3% rise in profit to Rs. 2,133m. As a consequence, the importance of mobile to the group grew quite considerably: mobile accounted for 16.7% of total revenues in 2007, up 3.0pp year on year, and 47.8% of profits, up 14.6pp.

Posted to the site on 26th March 2008

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