Apr 08 23
Telco revenues: part two
Posted by David Braue @ 16:10 8 comments
Great to see so many constructive comments on here — definitely a case of the facts speaking for themselves.
I appreciate your comments about providing more information but I must point out that there are only so many hours in the week and I pulled out the most immediately relevant numbers so as not to force you to wade through pages and pages of stats.
I cannot pretend this analysis is the be-all and end-all but it was a good starting point for some good discussion.
The whole reason for this approach is that I was initially struck by the fact that Telstra, pound for pound, seems to have higher revenues for its size than many of the other companies listed.
With revenues of AU$23.7 billion and 25 million customers, it is — and let me use a very, very simplistic measure here — sitting on around $948 per customer across all its businesses. Optus, which for argument's sake has around 9 million customers, generated $831 per customer across all its businesses.
TeliaSonera, which I included because of my recent comments on its move to embrace functional separation, is heavily skewed towards mobile services and generated just $17.5 billion from 115 million customers, or $152 per customer across all its businesses. But its mobile ARPU is $559, which suggests that the company's other businesses are dragging down a much healthier mobile business.
Indeed, in my research it appears that mobiles are the growth engine at most carriers; the challenge, of course, is converting that growth into actual revenues.
Witness the challenge of AT&T, which had a relatively low mobile ARPU of $176 but still generated loads of money — more than $1,000 a year — from its 100 million-plus customers; this disparity is likely due to AT&T's extensive infrastructure, big-spending business clientele and the like.
Objectively, I would say AT&T's mobile business is significantly underperforming compared with its other businesses; interestingly, its lock-in with Apple's iPhone doesn't seem to have improved the situation much — as an aside, I notice AT&T last week announced it would lay off around 4,000 employees.
Interesting also that Optus's mobile ARPU is just one-quarter that of Telstra.
This can be read in two ways: either Optus is attracting budget-conscious customers looking for cheap phone calls and little else, or that Telstra subscribers are just far more willing to spend money on their mobile services — and Telstra is obliging by setting prices far higher.
This is no surprise, and it's certainly not bad for Telstra; in what is a highly competitive mobile market, Telstra's achievements in lifting its ARPU are certainly to be commended — from a financial point of view.
Sol Trujillo was quite happy to brag publicly about how the transition to Next G has lifted the company's ARPU by around $20 a month, and there is clearly something the rest of the industry can learn from this — even if it is just that the market will bear higher prices.
On the broadband side of things, I was frankly surprised to see that Telstra's ARPU was lower than that of the other countries; unfortunately, I couldn't locate Optus's broadband revenue figures (or Verizon's) to make a more useful comparison.
That having been said, I can make no representations as to the quality and type of services people are receiving; Verizon, for example, is currently delivering fibre-to-the-home to more than 1 million customers and SingTel's 100Mbps hard-wired services are enough to make a Telstra customer cry.
As far as the comments about ARPU being very low, remember that the prepaid segment is the fastest-growing for many operators; many customers might put $50 on their phone but take three months to spend it. This is perhaps more common at Optus, which would help explain its lower ARPU. I wish Vodafone and 3 would have broken out their local revenues to offer more points of comparison.
At any rate, feel free to add more feedback. I enjoy the intelligent contributions you all make and look forward to an interesting debate.
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Telstra is for people that don't know better.