Vodafone NL growth driven by fixed broadband - market share target unrealistic

Wednesday 11 November 2015 | 12:36 CET | Background

Vodafone Netherlands reported results for its fiscal second quarter to September, showing revenue up 3.2 percent  and EBITDA 0.6 percent higher. Telecompaper calculates the EBITDA margin fell to 34.9 percent from 35.8 percent. This is likely due to the operator's expansion on the fixed market, including network investments and customer acquisition costs. Capital expenditure was still lower year-on-year, at EUR 55 million versus EUR 75 million, helping cash flow (EBITDA minus capex) increase 13 percent to EUR 68 million. 


The number of postpaid customers was up slightly on an annual basis (+3% in the business market), while prepaid customers were lower and ARPU fell in both segments. Vodafone did show growth on the consumer fixed market, and this is likely what drove the increase in results across the company, along with the business segment. The latter is mainly growing in mobile; it's still unclear what the business market is contributing in fixed.

Vodafone notably announced the target of a 10 percent share of the consumer broadband market within five years. A quick calculation shows that this would be equal to around 750,000 connections, or 14 times more than it currently has. This would have to come at the expense of market leaders KPN and Ziggo, and probably also Tele2. Or the company is considering acquisitions. Caiway (part of CIF) is up for sale, and Vodafone is probably also interested in the fixed activities of Tele2 and the M7 Group (Online). Neither of the latter seem particularly realistic candidates though, given the stated aims of both Tele2 and M7 to grow in the broadband market. Unless of course Tele2 chooses a mobile-only strategy.


We look below more closely at the financial and operational performance at Vodafone NL. First the revenue and its various components, recalculated in euros.

  • Total revenues EUR 489 million (+3.2%). This is the highest growth in four years. For Vodafone Group, the revenues were lower due to currency effects (-6.7%).
  • Service revenues (fixed and mobile, incl M2M, wholesale, roaming, transit, etc.) EUR 448 million (+1.2%) and 'other' revenue (mainly handsets) EUR 40 million (+32%).
  • Fixed-line revenues +32 percent. Further details, such as a consumer-business split, were not provided.
Customers numbers (on a quarterly basis):
  • On the mobile market, Vodafone lost 13,000 postpaid customers and 28,000 prepaid users, for totals of respectively 3.88 and 1.26 million. This is the first loss of postpaid customers in more than five years. Prepaid has fallen to 24.5 percent of customers from 39 percent five years ago.
  • The consumer broadband base increased by 12,000 to a total 73,000 (+138% on an annual basis).
Vodafone gave the following figures for ARPU:
  • Slightly higher year-on-year at EUR 26.0, driven by the greater share of postpaid in the customer base. Prepaid and postpaid ARPU were both lower.
  • ARPU was higher on a quarterly basis for postpaid, at EUR 33.2. Prepaid fell slightly to EUR 4.0.
And finally, the network and traffic statistics:
  • The 4G network is at near-national coverage and LTE-Advanced is available in 130 municipalities. The number of customers with 4G devices reached 1.4 million.
  • Smartphone penetration increased by 4.4 percent points to 68.2 percent. Data subscription take-up fell to 73.7 percent, the same level as a year ago.
  • Data traffic totaled 9,289 TB in the quarter, up 83 percent year-on-year. We estimate this means 601 MB per month per customer, but this is likely too high as it doesn't count the wholesale clients. Based on our estimate for the number of wholesale customers, average data use was 570 MB per month (incl retail and wholesale), up from 313 MB a year ago.
  • Voice traffic rose 6.3 percent year-on-year to 2.7 billion minutes, equal to around 170 minutes per customer per month (retail and wholesale).

For further details on Q3 2015 results, please see our Dutch Mobile Operators report, which will be published later this month. 

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