Telco revenues: part two

Telco revenues: part two

Summary: Great to see so many constructive comments on here — definitely a case of the facts speaking for themselves.

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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.

Topics: Telcos, Optus, 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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8 comments
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  • Telstra is for ...

    Telstra is for people that don't know better.
    anonymous
  • I agree for the most part

    There's one line in here that's correct, but is only tells half the story.
    "more than 1 million customers and SingTel's 100Mbps hard-wired services are enough to make a Telstra customer cry."

    Telstra customers, Optus customers, Primus, Internode, IInet, whoever you subscribe to, that's enough to make anyone cry. Just Australians in general.
    anonymous
  • More Data

    3 Australia reported their monthly ARPU as $69 with $10 of this being SMS and $8 being '3G Services'. That stacks up really well! In terms of the talk on Optus having such drastically low ARPU, just have a look at how they're attracting customers. Cute animals and wildly confusing cap plans are the focus rather than 3 and Telstra in particular who have got the hint and are attracting customers with a content proposition (Bigpond and Planet3). Optus has seriously lost their way.
    mobileaus.blogspot.com
    anonymous
  • What else

    I would always go with a company that has no superior products on the market ... as it stands I don't know of any company that offers better services then Telstra.
    anonymous
  • The T in Telstra is for Tried, Tested and True!!

    Telstra is the backbone of Telecommunications!
    anonymous
  • not happy Jan.

    Having been locked into a telstra mobile plan, and had my home phone with telstra I was blowing $150.00 a month.

    I've switched to VOIP, prepaid mobile with Vodafone, and dropped that to approx. $50 /month.

    Telstra can take their services and jam it.
    anonymous
  • What can operators learn?

    Your open comment about what operators can learn from Telstra's increased ARPU from NextG is a big one. For me, most noticeable has been Telstra's focus on showing people the sort of content services that mobile broadband will enable. The concept of mobile broadband (the stuff you get from a phone, not from a dongle) is still quite esoteric for a lot of people. Telstra has given them the network and then the services that make them want to spend more on content services. 3 also does this well with xseries, VOIP, IM etc. and thats reflected in their ARPU's (see my previous post with 3's ARPU break-outs. Voda and Optus have gone nowhere near this and this is reflected in their performance.
    mobileaus@blogspot.com
    anonymous
  • Great point

    There are several considerations to delivering revenue from a service.

    Differentiation from other products on the market,. If you do not provide a real and tangible differentiator then people will not pay the price difference and the product simply becomes a commodity. Telstra and 3 have used the capabilities of this technology to deliver feature rich services that can generate greater income, for those who do not wish to use these they have the choice of not using it or choosing a company that does not have extra unneeded services. For those that want these services and are willing to pay the additional fees then they can be a (literal or metaphorical) life saver.

    Availability, companies such as 3 have a targeted (younger) client base and appear to be happy to keep this smaller client base for the time being. On the other hand Telstra has targeted a much wider audience, over 20 million, to generate their revenue, Optus and Vodaphone are happy for the time being to target an audience of around 19 million and only about 11 million with feature rich options.

    There are more but this is getting a bit long so I will stop here.
    anonymous