Telco revenues: my facts, your opinions

Telco revenues: my facts, your opinions

Summary: I don't think I'm stepping out of line when I say that every good analysis combines facts and opinion.

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I don't think I'm stepping out of line when I say that every good analysis combines facts and opinion.

This week, rather than sharing both facts and opinions with you as usual, I thought I would try an experiment. While I have lots of opinions about the facts I'll present to you this week, I'm going to withhold them and see what you think.

Read the facts below, ruminate on their implications, and please share your thoughts below. I will post my own thoughts on these facts - which would normally comprise the second part of this column - after the weekend. In the meantime, I'm quite curious to see what you all think these numbers mean for Australia's telco market.

Here's the factual part:

As regular readers would have noticed, I've spent some time recently trolling through annual reports of various telecommunications providers around the world.

This was triggered by a Telstra chart touting the carrier's growth in comparison to the growth rates of several of Europe's more poorly performing mobile carriers, and a question as to why there weren't more efforts to get involved in the growth of more rapidly-expanding providers in India and elsewhere.

Reading through one annual report after another, I was struck by something — but I'll reveal what when I post the opinion half of this piece. For now, let me provide you with these facts, taken straight from each telco's fiscal 2007 financial reports.

ARPU means average revenue per user and is quoted here as an annual figure for easy comparison.

TeliaSonera, which has 115 million customers in nearly two dozen countries, generated overall revenues of SEK96.3 billion (AU$17.5 billion) for the year. This included SEK44.5 billion (AU$8.1 billion) from 14.5 million mobile customers for an ARPU of AU$559. Approximately 2.3 million broadband customers provided SEK270 (AU$49) per month for the company, equal to an annual ARPU of AU$588.

SingTel, with operations in nine countries, reported revenues of S$13.151 billion (AU$10.47 billion). This includes S$320 million from 421,000 broadband subscribers (S$760/AU$605 ARPU) and S$238 million from 1.82 million Singaporean mobile customers (S$131/AU$104 ARPU). It also includes AU$7.48 billion revenues from Optus, which reported AU$1.02 billion in revenues from around seven million mobile customers (AU$146 ARPU) and an unspecified amount of revenue from 781,000 broadband customers.

NTT Communications from Japan saw revenues of Y1145.4 billion (AU$12.2 billion), including Y319.7 billion (AU$3.39 billion) from 6.1 million Internet subscribers (AU$556 ARPU). NTT DoCoMo, a separate provider of mobile services, reported 52.6 million subscribers and generated revenues of around Y338b (based on a stated ARPU of Y6430 per month = AU$819 per year) or around AU$43 billion for the year.

Verizon, with well over 100 million customers, reported revenues of US$93.5 billion (AU$100 billion). This included US$43.9 billion (AU$47.4 billion) from 65.7 million mobile customers (ARPU AU$721) and 8.2 million broadband customers; revenues from those customers weren't broken out.

AT&T reported revenues of $US119 billion (AU$126.9 billion), with 70 million mobile subscribers generating US$11.4 billion (AU$12.3 billion) in revenues, for an ARPU of AU$176. Broadband revenues were US$6.1 billion (AU$6.6 billion) from 14.2 million customers for an ARPU of AU$430.

Telstra reported revenues of AU$23.7 billion from 25.1 million total customers. This included $5.7 billion from 9.212 million mobile customers, for AU$619 ARPU, and $1.95 billion from 4.822 million broadband customers, for an ARPU of AU$404.

Telco Broadband customers Broadband ARPU AU$ Mobile customers Mobile ARPU AU$ Annual revenue (AU$)
TeliaSonera 2.3m $588 14.5m $559 $17.5bn
SingTel 421,000 $605 1.82m $104 $10.47bn (includes Optus)
Optus 781,000 unspecified 7m $146 $7.48bn
NTT Comms/ DoCoMo 6.1m $556 52.6m $819 $12.2bn
Verizon / Verizon Wireless 8.2m unspecified 65.7m $721 $100bn
AT&T 14.2m $430 70m $176 $126.9bn
Telstra 4.822m $404 9.212m $619 $23.7bn

Please discuss. I look forward to reading all of your thoughts.

Topics: Telcos, Telstra, SingTel, AT&T, Tech Industry

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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14 comments
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  • Telstra... what a rip off!

    Or are they?
    I notice the ARPU for their broadband users is the lowest listed in the table. Why then do people harp on about Telstra being such a rip off?
    These prices also include managing and maintaining the network. Telstra Haters, any thoughts?
    anonymous
  • Not enough data

    David, this two-part experiment is a nice idea. However, you have not given your readers enough data to form an informed opinion. Knowing one company's ARPU versus another company's is not helpful without also knowing what kinds of services each company delivers.

    For example, what does the average TeliaSonera broadband customer get for their $588, and how does that compare with what the average Telstra broadband customer gets for their $404?

    Perhaps you could provide this kind of data with your analysis.
    anonymous
  • Global v's Domestic

    This is an interesting post.

    The fact that you have used a uniform set of rules to compare companies globally, what would have been good is to use a benchmark based on income levels to iron out the comparisons based on the actual population base.

    It would also be good to look at a broader comparison of Australian companies, I don't know if you can look just at things such as voice usage on mobiles or the amount of broadband data carried and calculate the average cost per Kbps or MB.

    It is good to see that when you stick to the cold hard facts certain companies do not seem as bad as they are made out to be. I look forward to reading your opinion piece and seeing how this can all be twisted around.
    anonymous
  • Where is that mobile ARPU from?

    That mobile ARPU for SingTel and Optus (and AT&T) is ridiculously low. Around $10 a month? I'm not digging into the others, but AT&T has monthly ARPU of more than $50 (http://www.moconews.net/entry/419-earnings-att-net-income-up-62-percent-on-wireless)
    anonymous
  • Telco revenues

    Clearly these figures show a dominace of Telstra in Australia, but having said that, many people across Australia have no other option.

    I am in this bunch, i am just outside of 6k away from the excahnge and no one can get ADSL to me not even Telstra, yet I have a Foxtel cable so I am stuck with Telstra for Internet.

    As for the cost yes Telstra are a rip off in many ways, A strong case for seperation no doubt.

    The fiigure clearly show a need for improved competion and better transparancy in the Telco sector here in Australia.
    anonymous
  • Clearly shows? I disagree.

    Anthony, what about the above data "clearly shows a need for improved competition and better transparency in the Telco sector here in Australia?"

    There is only one Aussie telco listed for starters, so this doesn't show anything about the communications environment in Australia.
    Furthermore, are you trying to suggest that the subscribers figures shown is an indication of who in Australia doesn't have any other options?

    Surely having just shy of 5M broadband subscribers, and in excess of 9M mobile subscribers would indicate that a significant number of people are choosing Telstra. I can't imagine for a moment that this particular 5M, or 9M respectively have no alternative.

    You admit to being a Telstra cable subscriber, and that you are 'stuck with Telstra internet. As for cost, yes Telstra are a rip off in many ways, A strong case for seperation no doubt'.

    These comments seem silly to me. You are disgruntled about being stuck with Telstra, but by your own admission, there is no alternative. Wouldn't it be more appropriate to be disgruntled about companines not investing in your area, and hence, not giving you a choice? At least Telstra has made something available to you, I see little reason to be unhappy with them. Then you say they are a rip off, but as the figure shows, the broadband ARPU is one of the lowest. Why on earth is that a strong case for seperation?
    As soon as they are seperated, you can rest assured that Telstra will act like every other telco, and only invest in high profit areas. I think your logic is fundamentally flawed in this case.

    Is there no gratitude that you at least have something? If it was me in the same position, it's the competion I'd be having a crack at.
    anonymous
  • Interesting Statistics

    I didn't realise Telstra's annual revenue was so much higher than Singtel's.
    anonymous
  • Go figure?

    Agree there is not enough info to really understand the relevance. Do the Telstra numbers include wholesale? If so, this would lower the average cost per subscriber, ie if half the number were wholesale, the APRU would be closer to $800. I would be interested in EBITDA numbers to understand profitability. Need more detail...
    anonymous
  • $10 per month

    ..is what my wife and both my kids pay for their mobile services from Optus and Voda. We are very happy with the service and will no doubt be forced into a costly 3G service very soon (such as happened with the Telstra CDMA closure)
    I hope one of the major carriers keeps a low tech voice service continuing for some time..
    anonymous
  • Australian Telco

    There are two Australian Telcos in the table - Optus and Telstra. Both registered Australian companies.
    anonymous
  • How is Optus only $12 per month

    How could they only have an ARPU of $12 per month.

    If we assume 1000 clients, 100 on $80 per month, 200 on $60, 300 on $40, 200 on $20 and 200 on $5.

    This makes $37 on average.

    I know a lot of Optus users (me included) and after a quick survey of 12 people none of us spend under $40 per month.

    There is something flawed here.
    anonymous
  • TELCO REVENUES -- PART 2

    PART 2
    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 – 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 $23.7b and 25m customers, it is (and let me use a very very simplistic measure here) sitting on around $948 per customer across all its businesses. And Optus, which for argument’s sake has around 9m 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 $17.5b from 115m 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 $1000 a year – from its 100m-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 4000 employees).
    Interesting also that Optus’ 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 or 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’ 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 1m customers and SingTel’s 100Mbps hardwired 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 segment for many operators; many customers might put $50 on their phone but take 3 months to spend it. This is perhaps more common at Optus, which would help explain its lower ARPU. I wish Vodafone and Three 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 forwar
    anonymous
  • How could you trust Optus information?

    The Optus figures are skewed due to some very questionable business practices. I have seen first hand how (when I was working for them) we would offer a client an Optus solution, to increase our chances of winning we would also send in a colleague or two from one of our other companies offering cheaper pricing and then a third with even cheaper pricing. We covered a wide spread of pricing just in case Telstra or another competitor came in, we would discuss solutions and what the customer was saying about us as often they didn't realise we were working for the same company. I left in disgust, lodged a complaint with the ACCC (under a Liberal government), as expected heard nothing and now will never go back to the communications industry.
    anonymous
  • Optus were acquired!

    Sorry about the tardiness of response, this one slipped past.

    In 2001 Optus were acquired by Singapore's SingTel.

    So it may be a bit pedantic , but as such, I believe Steve is technically right. Telstra are the only Oz company in the table.
    anonymous