Telecom sheds 92,000 mobile customers: the new standings

TOTAL NZ MOBILE CONNECTIONS

Vodafone: 2,434,000*
Telecom:  1,987,000**
2degrees: 875,656***
TelstraClear/MVNOs: 50,000****

2DEGREES

August 2009: launches
February 2010: 209,000 customers
March 2011: 580,000 customers
February 2012: 876,000 customers

All carriers count each connection as a "customer", so a person with separate SIM card accounts for, say, a mobile phone, data stick and iPad, counts as three customers.

February 24: Telecom lost a net 92,000 mobile customers in the six months to December 31, the carrier reported this morning.

In the previous six month period, the company lost 95,000 mobile customers.

The introduction of the iPhone 4S had helped Telecom add a net 27,000 connections in the post-paid (contract) segment of the mobile market.

Expanding smartphone sales meant mobile ARPU [average revenue per user] increased by 8.6% to $29.18.

Vodafone has also shed customers over recent quarters. 

2degrees, which recently claimed 865,000 customers, appears to have gained at the big two's expense.

Telecom also reported that 639,000 customers remain on its CDMA network, which is due to be closed on July 31 (down from around 1 million at Telecom's previous 6-month report).

The company said the 639,000 customers accounted 11% of its revenue. Chief executive Paul Reynolds said on a conference call to analysts that "only" 300,000 had actively used the CDMA network in the past month.

Telecom recently launched a low-cost sub-brand, Skinny, which analysts see as an attempt to speed the CDMA transition, and staunch the flow of customers to 2degrees.

2degrees claims 875,656 customers, beating analysts' expectations

February 9: 2degrees has 875,656 customers, the company claimed in a statement this morning (unlike the publically listed Telecom and Vodafone, the carrier is not required to provide a detailed account of its connections).

Spokesman Michael Bouliane told NBR the 875,656 figure was for active customers as of noon yesterday. "Active" was defined as a customer that "made or received calls or texts, or who used data, over the past 90 days," Mr Bouliane said.

Chief executive Eric Hertz cited 2degrees' move into the business market as one factor in its growth. IDC senior telecommunications analyst Glen Saunders agreed, telling NBR that the carrier's entry into the small and medium business markets lifted sales.

At its last update, on March 22 last year, 2degrees claimed 580,111 customers.

The company, which launched two and a half years ago, also said today that 275,000 people have now brought (or "ported") a Telecom or Vodafone number to 2degrees. (Porting statistics are independently tracked by the Telecommunications Carries Forum).

"It’s a big number, more than I expected," Forsyth Bar research director Guy Hallwright told NBR. Mr Hallwright had expected about 2degrees customer numbers to fall in the 770-800,000 range as of December 31, but today's headline number means it was probably in 840-850,000 at that time.

Without a breakdown of metrics such as pay monthly vs pre-pay customers, or average revenue per user (ARPU), it was difficult to access the carrier's headline figure.

2degrees refused to provide further detail for "competitive reasons."

Prepay/contract split
IDC's Mr Saunders said, "The growth is a little ahead of our forecast in our latest competitive ecosystem report and probably gives them around 16% market share in the mobile market overall - 18% in the prepaid space and around 2% of the pay monthly market."

Pre-pay customers are generally spend a lot less than those on contracts.

Others losing
Telecom (-95,000 over a quarter) and Vodafone (-50,000 over six months) have both reported customer losses in their most recent customer number updates.

ForBarr's Mr Hallwright is expecting Vodafone and Telecom to report "similar or possibly slightly larger declines" for their respective December quarters.

Vodafone PLC is scheduled to reveal global and country-specific customer numbers at a quarterly financial briefing tomorrow.

Telecom will update on mobile customer numbers at its six-month result briefing on February 24.

Challenge ahead
2degrees major new threat is Telecom's new budget-priced, youth-focussed sub-brand Skinny.

Skinny soft-launched at retail - including some Dick Smith and Warehouse stationery stores - last week and will shortly begin online sales.

2degrees was clearly keeping a close eye on Skinny, IDC's Mr Saunders told NBR.

Mr Saunders saw 2degrees' new $19 Data Combo deal as a direct response to Skinny's entry into the market.

2degrees is majority owned by Seattle-based telco investment company Trilogy International Partners, with iwi interests holding a minority stake.

Mr Hertz said today that 2degrees now employes 545 staff.

Last year the carrier, which describes itself as still in a start-up and expansion phase, lost $76.8 million on $107 million revenue.

2degrees says it has now spent $350 million on its network. It's latest retail and network expansion phase is being bankrolled by a $100 million credit line from Huawei.

* Vodafone PLC 2011 financial report, three months to September 30, 2011
** Telecom earnings report six months to Decemember 31, 2011
*** 2degrees public announcement
**** Estimate based on MVNOs' comments to NBR. Mobile virtual network operators resell a wholesale service. Easily the largest is TelstraClear, with around 47,000 mobile customers (it told NBR this morning, Feb 9, 2012) using a rebadged version of Vodafone's network. Vodafone does not include MVNO numbers in its total.

The total number of mobile connections exceeds New Zealand's population, reflecting that a number of people have more than one mobile phone account and/or data devices with SIM cards.