Iusacell - Disappointing Customer Growth One Year on From Merger
Published on: 6th Aug 2008
Note -- this news article is more than a year old.
It is now more than one year since Iusacell, Mexico's third largest operator by customer numbers, merged with rival Unefon. In operational terms, the performance of the merged network has been disappointing, with annual net additions of only 130k, equivalent to just 3.3% growth. This compares to net additions of 583k and proportionate growth of 17.5% for the prior twelve months on a pro forma basis. Iusacell's total customer base at the end of June 2008 was 4.05m compared to 3.92m a year earlier, with market share down 0.8pp at 5.5%.
One positive aspect of Iusacell's performance over the past year has been the improvement of customer quality. While the prepaid base lost 104k between the end of Q2 07 and the end of Q1 08 - a loss which net adds of 66k in Q2 08 could not recoup - the contract base has shown consistent growth. The total number of contract customers reached 1.08m at the end of the quarter, with an annual growth rate of 18.5% compared to 15.9% for the previous twelve months. This brought the contract proportion to 26.6%, up 3.4pp annually -and it is here, perhaps, that Iusacell is concentrating its fight.
Another plus was the growth of the 3G base. At the end of Q2 08 there were 71k CDMA2000 1x EV-DO customers, up from 26k a year earlier. This amounts to 173.1% annual growth. What is perhaps most impressive is that quarterly growth was at 31.5% three years after the technology was first launched. However, in real terms the 3G base still only represents a small fraction of the total: 1.8% at the end of Q2 08, up from 0.7% a year earlier.
The increases to the contract base and the 3G base are two of the factors which the company mentions with regard to its increase in revenues. Certainly revenue growth outpaced customer growth, with second-quarter net revenues up 5.8% on an annual basis to Ps. 2,661m. EBITDA, meanwhile, was up 9.5% to Ps. 460m. This pushed the EBITDA margin up to 17.3% from 16.7%.