Excelcomindo Q2 - 85% Price Crash Boosts Connections by 124%
After three quarters of solid growth of between 2.5m and 3m new customers, Indonesian operator Excelcomindo (XL) has put in a record performance of 4.50m net additions in Q2 2008, to boost its total by 24.5% in just three months. In fact, the number represented a fourth consecutive quarterly record, leaving the rolling annual total at an impressive 12.7m – an incredible seven times what the operator managed in the prior 12 month period. Annual proportionate customer growth stood at 124.5% - the highest rate recorded by the operator since the late 1990s, when it was in its infancy with fewer than 500,000 connections.
Click to enlarge
Net Additions vs Effective ARPM, Q4 05 - Q2 08
All this took XL bounding past the 20m customer mark to finish June 2008 with a total base of 22.9m. All but 475k of these were prepaid connections.
XL’s performance in the quarter will no doubt have won it more market share, to add to the 4.7pp already gleaned since the the end of June 2007. (To know exactly how much, we must await confirmation of competitor Indosat’s first half figures, which have not yet been fully released.) But what was the cost of this progress? On the face of it, not much: H1 2008 ARPU held up at Rp41,000 against Rp42,000 in Q1, and was only 11% down year on year from Rp46,000 in H1 2007, despite the customer base more than doubling in size.
The explanation here lies in the outgoing minutes of use figures which were up 54% in the quarter and 500% half-year on half-year at 169 minutes per month. These numbers imply a decrease in the effective price of an outgoing minute of 85% over the year, and 36% in the last quarter alone. In combination with the increase in the size of the customer base, the increase in AMPU boosted the total number of minutes of use across XL’s network from 1.74bn to 27.36bn – an increase of almost 1500%. XL’s numbers for Q2 are probably the most remarkable set we have seen this quarter, and it was no different in the P&L as Q2 revenue rose 67% to Rp3.18trn and EBITDA 88% to Rp1.49trn, on the back of scale effects.
Given the remarkable usage statistics, it is no surprise that XL quotes many of its key metrics this quarter on a “per minute” basis. Thus, we find that cash cost is down 89% at Rp61 per minute, depreciation down 87% at Rp28 per minute and gross fixed assets per minute down 91% at Rp261.
Posted to the site on 14th August 2008
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