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Bite Baltics - Churn reduced but no end to customer decline

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Note -- this news article is more than a year old.

Bit continued to shed customers in Q1 08, recording net losses in both Latvia and Lithuania. This was the sixth consecutive quarter in which it has seen a decline in its total customer base, although the loss was just 4.4k, the smallest yet. Nevertheless, on an annual basis the combined customer base of the two operations fell by 175.3k to 1.10m, a 13.7% drop.

As we have noted in previous issues of The Mobile World Briefing, Bit's problems stem from its shockingly high churn rates. In Q1 08 Bit Lithuania saw its lowest ever blended quarterly churn rate of 12.2% and Bit Latvia its second lowest of 30.7%, and these improvements explain the relatively small loss of customers - but they remain unacceptably high, particularly in the case of Latvia. On a group basis, the churn rate was 13.6% in Q1 08 compared to 19.6% in Q1 07, but again, this needs to be reduced further if the company is to stop bleeding customers.

In terms of individual performances, Bit Latvia saw a 36.6% annual decline in customers from 127.8k at the end of Q1 07 to 81.1k a year later. The only silver lining to this cloud was that the losses were confined to the prepaid base, with the number of contract customers increasing 91.4% year on year to 41.2k, 50.8% of the total up from just 16.8% at the end of Q1 07. Bit Lithuania saw a similar trend: the total customer base was down 11.2%, but contract customers were up 9.9%, and the contract percentage improved from 35.0% to 43.3%.

This improvement in customer quality - albeit due mostly to the loss of prepaid customers - was a key factor behind an increase in blended ARPU figures at both operators. Latvia's first quarter ARPU was up from ‚4.21 to ‚10.81, while Lithuania saw its figure rise from ‚9.22 to ‚11.58.

However, these increases in ARPU could not compensate for the decline in customers, and group losses widened by more than a third, from ‚11.83m in Q1 07 to ‚15.90m in Q1 08.

Quarterly Churn Rates, Lithuania and Latvia

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Tags: arpu  churn  cloud  Latvia  Lithuania