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Little growth in Belgian mobile revenues as shift to postpaid offset by quad-play discounts

Friday 8 September 2017 | 10:28 CET | Background
The Belgian mobile market continued its transition to postpaid in Q2 2017, but this has yet to provide a big boost to service revenues. The drop in prepaid users was less than expected after the first deadline for registration in June, and the prepaid losses were largely offset by postpaid additions, according to the latest research by Telecompaper. However, the operators’ focus on quad-play plans appears to be offsetting the benefits to mobile ARPU from the migration to a largely postpaid market. As a result, we expect little growth in mobile service revenues in the rest of the year. 

Proximus now has 22 percent of its households taking-quad play, and Telenet counts around 24 percent of its cable subscribers as quad-play customers. As Orange only recently re-entered the fixed market, it is far behind Proximus and Telenet, but has still managed to sign up 4.5 percent of its postpaid base to its fixed offer. This focus on convergent bundles generally has a negative impact on the mobile market, as those plans often come either with several Sims included (Telenet) or at heavily reduced prices for the mobile component (Proximus).

Fewer prepaid customers, better ARPU

Most of the drop in prepaid Sims occurred in the first quarter of 2017, with a smaller decline in the second quarter, at 150,000 versus 357,000 in Q1, according to the latest figures from Telecompaper’s Belgian mobile database. However, more prepaid users will be disconnected in the third quarter, once the next regulatory deadline for registration passes on 07 September. Proximus said it still had 93,000 unidentified cards on its network in June, and there were nearly 33,000 unregistered cards at Orange and almost 50,000 at Telenet. Assuming that the majority of these cards were either inactive or with people who don’t want to be identified, we expect that in Q3 around another 100,000-150,000 prepaid cards will be taken out of the Belgian mobile market.

The prepaid loss in Q2 2017 (150,000 net) was nearly as large as the postpaid gain of 143,000 Sims, indicating, as Orange did, that many of the prepaid customers have switched to postpaid. The impact of this on service revenues has been positive, albeit slightly. In the second quarter, mobile service revenues increased by 0.7 percent to EUR 731 million. Proximus remains the largest player, accounting for around 45 percent of total mobile service revenues, with Orange taking about 30 percent. 

Orange and Proximus both showed an increase in postpaid ARPU in the past quarter, of 5.5 and 1.3 percent respectively. Both indicated that mobile data monetisation is still going strong, with smartphone penetration continuing to increase as well as average mobile data usage. Despite showing the largest increase in postpaid customers, Telenet’s postpaid ARPU fell by 1 percent to EUR 25.1 due to its customer base growing at a faster rate than its service revenues (3% vs 1.5%), partially because of the quad-play discounts, as Telenet itself indicated.

The loss of the unregistered prepaid customers has possibly left Proximus with a more valuable prepaid customer, as its prepaid ARPU went up by EUR 0.9. Orange also noted a small increase in prepaid ARPU, up by EUR 0.2, while Telenet’s prepaid ARPU declined by EUR 0.9. 

Despite the expected further drop in prepaid customers in Q3, the Belgian mobile market is more likely to show a flattish trend in service revenues for the rest of 2017. As the share of prepaid revenues has now fallen to just under 10 percent, the result of even fewer prepaid customers will not materially affect total service revenues. Both Proximus and Telenet have forecast stable revenues in 2017, while Orange aims to grow compared to 2016. 


 



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