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Fareastone Loses Customers but Pips Taiwan Mobile for Second in July
Taiwanese operator Fareastone lost customers in Q2 2008 for the first time since the removal of inactive accounts from the base in 2005 and 2006. Nevertheless, the net quarterly decrease was only 3,000 - a decline which was promptly reversed in July with the addition of 9,000 new connections on a net basis.
More importantly, however, was the fact that nearest rival Taiwan Mobile reported a slightly bigger loss of 5,000 customers in the quarter, which left it with an identically sized base to Fareastone of 6.223m customers. Furthermore, Taiwan Mobile went on to lose another 4,000 in July, widening FareastoneÃ's lead to 13,000, cementing the latterÃ's ranking as number two operator for only the second time in its history - after a brief flirtation with the position in Q4 2005. Fareastone would appear to have achieved this by attracting a greater number of new additions than its rival, as its churn has remained consistently higher than that at Taiwan Mobile since the operator began disclosing the metric at the beginning of 2006.
Fareastone also has the advantage that its customer base is of much better quality than its rivalÃ's. Although it made extremely good progress, with a 15% increase in the year, Taiwan Mobile finished June with a contract base of only 584k - 9.4% of the total. Fareastone, on the other hand boasted a base of 1.475m at the same point in time, although growth was only 1.2% in the year, which led to a deterioration in overall quality from 24.1% to 23.7% contract. This was a contributory factor in the 4.2% decline of blended ARPU from NT$808 to NT$775 per month between Q2 07 and Q2 08, in contrast to Taiwan Mobile, which saw its own average monthly spend fall by only 2.0% from NT$794 to NT$778 per month - giving it a small ARPU advantage over its now very slightly larger competitor.
The decline in ARPU, combined with a 2.7% annual increase in the overall size of the customer base, caused service revenues to fall 1.6% year on year to NT$14.4bn, although equipment revenues rescued the top line to precipitate a 0.4% increase to NT$15.8bn. However, EBITDA was 4.7% down at NT$6.7bn, leaving the margin off 2.2pp at 42.2%. Net profits followed, down 5.2% at NT$3.7bn, leaving the profit margin down, but still at a healthy 23.1% all the same.
Posted to the site on 3rd September 2008
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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