While the number of customers is falling, ARPU is increasing, helped by more bundling as well as likely more use of the VoD service MyPrime and the migration to higher broadband speeds. The rising ARPU is positive; the problem is fewer customers. Vodafone has already improved its competitive position, and Tele2 is likely to come with a new offensive at the end of the year, so the competitive pressure won't relent.
Ziggo was very clear about the source of the problem. Customer numbers and revenues are falling due to problems with the merger integration, competition and last but not least, its own price increases. It's no secret the price increase at the start of March led to many customers cancelling. The operator's current marketing campaign is focusing more on price, reversing some of the price hikes.
EuroDocsis 3.1 and 4G will bring ever faster speeds in the coming months in both fixed and mobile internet. Ziggo can profit from KPN's reduced focus on FTTH in favour of the lower, shared and distance-dependent capacity of VDSL. The KPN network will resemble increasingly a cable network, with the difference that Ziggo can move towards gigabit speeds with the upgrade to Docsis 3.1. On the mobile market 4G speeds could also make Ziggo's offer more attractive. The volume growth in mobile contributes to revenue growth, even if it puts ARPU under pressure.
More initiatives from Ziggo can be expected to turn around its performance, possibly also with steps in the content market. For consumers, it may mean good news, with falling prices, improved offerings and even higher download speeds. The operator that plays this game well can win market share. And the one that loses customers will need to resort to cost cuts.
