Today's Comment: Bharti's Q1; Vodafone to raise post-paid tariffs; SK Telecom's LTE growth.
- SK Telecom has revealed stellar LTE growth.
- The operator is showing some encouraging signs of customers migrating to higher ARPU plans, but a squeeze on basic service fees is hurting.
Today we focus on three developments:
- Bharti Releases Q1 2012 Financials:
- Total revenues were up 15% y/y and EBIDTA 13.7% to reach a margin of 33.3%.
- Its core India and South Asian mobile revenues rose 10.4% and EBIDTA 11.7% (margin 34%).
- Indian mobile subscribers rose 11.8%: ARPU was down 2.7%, although stable on a sequential basis.
- Average revenue per minute, a good proxy for the stability of voice pricing, was up over the year, but slightly down on the quarter.
- Revenues from the group's 17 operations in Africa rose 15.9% and EBITDA 32.5% to achieve a margin of 27.8%.
- The operator now has commercial 3G networks in 7 of these African markets.
- Vodafone Announces Fresh Post-Paid Voice Tariffs:
- As of yesterday (1 May), Vodafone's post-paid customers in Mumbai will pay 0.012 Indian rupee (USD0.00023) per second for local and intra-circle calls.
- This 20% rise follows a similar rise in tariffs for pre-paid customers last July.
- According to TRAI data, Vodafone has some 6.1 million mobile customers in Mumbai at the end of December 2011. While the bulk of these are pre-paid, the tariff hike will affect several hundred thousand subscribers.
- We expect Vodafone to extend these tariffs to more circles. The move is primarily aimed at raising margins, although Vodafone has warned that the TRAI's spectrum auction plans would force it to raise prices for consumers.
- Data Growth Is Coming At a Cost for SK Telecom:
- South Korea's leading mobile operator's revenues were up about 2% y/y in Q1 2012.
- All segments including the largest, mobile service, experienced a decline in revenue over the year.
- Operating income was down 26.4% over the same period to reach a margin of 11.3%.
- The introduction of lower-cost plans last year failed to offset the impact of growing data usage, while smartphone growth raised operating expenses.
SK Telecom said that it reached 2.4 million LTE subscriptions at the end of April 2012. This represents a sharp rise from the 1,766,325 million reached at the end of March 2012. In a recent presentation the operator said that greater access speeds were driving customer migration to higher-tier LTE subscriptions. Around 80% of its LTE subscribers are on LTE-62 plans, which offer 3.5-GB of data and 350 voice minutes and SMS for 62,000 South Korean won (USD54.8) per month, which is 1.9 times higher than its current billing ARPU. SK Telecom says that users on LTE tiered plans are now on average consuming more data (1.5-GB per month) than on 3G unlimited plans (1.1-GB per month). This data justifies its aggressive deployment of LTE, although it and its peers are still seeing the negative impact of government moves to force it to lower its basic monthly service fee (see South Korea: 2 June 2012: SK Telecom to Lower Basic Mobile Service Charges).
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