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Telecom Argentina - SMS Drives Growth As Cellular Continues to Outperform
In its third quarter results for 2008 Telecom ArgentinaÃ's Personal unit recorded its fourth successive year-on-year increase in quarterly average ARPU - an impressive result in a market which now has a penetration rate of 104%. ARPU did not increase sequentially, quarter-on-quarter, but did match the eight-year high of P$42 per month recorded in Q4 2007, up from P$39 in Q3 2007. So what has been behind the trend? It was not voice usage: the 16.8% increase in carried minutes to 2.99bn was almost excactly in line with the 17.5% increase in the size of the customer base over the year, leaving AMPU almost flat at 86 per month in Q3 2008 versus 85 a year earlier. Rather, it was data usage - specifically SMS usage - which has driven the increase in expenditure. Total outgoing message volumes on the Personal network in Q3 2008 increased 68% in the year and 41% in the quarter to 4.8bn - an extra 42 messages per customer per month compared to last year, and an extra 35 compared to the previous quarter.
The result was a P$135m (+41%) increase in VAS revenues to P$467m, outstripping the P$115m (+14%) increase in turnover from voice and subscriptions. In Q3 2008 non-voice services made up 31% of total service revenues, against 27% a year earlier. Thanks to the growth of data services, and a 50% uplift in handset revenues to P$200m, third quarter revenues at Personal were boosted by 25% or P$345m to reach P$1.71bn - equivalent to 62.5% of the group total, compared to 58.9% in 2007.
However, things were not all rosy in the cellular business for Telecom Argentina. The companyÃ's Paraguayan subsidiary saw third quarter revenues decline 7%, despite customer growth of 21%, suggesting ARPU plummeted even further from the USD7 per month seen in Q3 2007 - which was itself over 30% down year-on-year. The overall increase in cellular revenues across both the Argentine and Paraguayan properties was slightly dented as a result, but as Nucleo is just 6.5% the size of Personal by revenues, the effect was small. What is more, the overall increase in cellular revenues of P$337m dwarfed the P$88m gain across all other business areas. The fixed business recorded an EBITDA margin of 25%, not far below the 32% in cellular, but D&A costs left just P$16m at the operating level compared to almost 30 times that amount (P$475) in mobile.
Posted to the site on 25th November 2008
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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