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Telecom Argentina - Mobile Dominates Further, but Still Not As Profitable
Telecom Argentina has managed to maintain its ARPU at P$40 between the first and second quarters of 2008, yielding an improvement of P$3 year on year and achieving an increase in the effective ARPM from 45 to 47 cents. The improvement was driven by a small increase in voice usage, from 82 to 85 minutes per month, a more significant rise in SMS volumes, from 84 to 102 per month, as well as a strengthening of the quality of the base, from 32.3% to 33.9% contract.
Combined with an increase in the size of the base of 15% in the 12 months to 30th June, the uplift in ARPU gave rise to a 27% increase in service revenues to P$2,749m. Equipment revenues did not quite keep pace, but were not far off, rising as they did by 21% to P$323m, depressing the overall increase in first half mobile revenues very slightly to 26%.
In addition to the 11.38m mobile customers Telecom Argentina has in its home market, it enjoys another 1.75m in neighbouring Paraguay with subsidiary Nucleo. Here, customer growth dropped to 3.1% in the quarter - its lowest level since the clean-up of the customer base was effected in 2004. Whilst market leader Tigo also had a slower quarter compared to the previous few periods, growth here was still 7.6%, which means that Nucleo almost certainly lost more market share to its larger rival in Q2 2008. In Paraguay, the annual increase in the size of the customer base amounted to 24.3% - indicative of the fact that penetration in Paraguay is only 75%, as opposed to 100% in Argentina. However, the expansion of the revenue base failed to match this, coming in at only 21% year on year at P$215m - around 7% of the P$3,072m collected in Argentina.
Overall, Telecom ArgentinaÃ's mobile business recorded first half revenues in 2008 26% up compared to 2007 at P$3,287m. The cellular unit continues to grow much faster than the rest of the company, increasing its weighting from 62% to 65% of the total turnover, which was up 20% at P$5,051m. At 19% the increase in EBITDA almost matched this, thanks almost entirely to mobile, where the metric was up 50%. However, mobile is a lower margin business for Telecom Argentina, even as the ratio of EBITDA to revenue rose from 21% to 26%, whilst in fixed it fell from 45% to 41%, H1 on H1.
Posted to the site on 13th August 2008
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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