Vodafone NL, T-Mobile NL in Q2: growth in postpaid

Thursday 15 August 2013 | 16:27 CET | Background

The results season is nearly finished, and we have already published reports on KPN, Tele2 NL, Ziggo and UPC NL. In this article we compare the results of Vodafone and T-Mobile in the Netherlands. Our upcoming DMO (Dutch Mobile Operators) report will give the full picture of the Dutch market in Q2 2013, and additional reports will be published on the broadband, fixed telephony and TV markets.

Vodafone Netherlands now has 5.322 million customers, after quarterly net additions of 24,000 (+48,000 postpaid, -24,000 prepaid). The share of prepaid has fallen to 31.6 percent from 35.4  year ago. T-Mobile Netherlands lost a net 61,000 customers to 4.561 million at the end of the quarter, of which 32.4 percent were prepaid (vs 36.2 a year ago). The quarterly change in customer numbers included a gain of 40,000 in postpaid and a loss of 108,000 prepaid lines. One should note these figures are not entirely comparable, as T-Mobile counts M2M Sim cards and Vodafone does not. Both include their sub-brands and exclude wholesale (MVNO) customers. Both are doing well on the postpaid market, while Vodafone is holding up better in prepaid. Both show a shift to postpaid.


In terms of usage, the figures offer limited comparisons. Vodafone reports on data usage, which accelerated to 55.4 percent growth from 36.4 percent a year earlier. T-Mobile did not disclose figures, but last quarter reported a 50 percent increase. Vodafone did not provide SMS figures this quarter due to a problem in reporting (this is expected to be rectified next quarter). 

While both operators report voice traffic, the figures are not comparable as Vodafone includes MVNOs and incoming roaming, but T-Mobile does not. Vodafone recorded growth of 3.0 percent to an average 163 minutes per user per month. T-Mobile showed a decline of 7.8 percent to 133 minutes per user perm month. Data traffic is up strongly at both operators, while SMS use (probably also at Vodafone) is declining. The writing on the wall is clear with Telefonica's recent decision to stop offering its own OTT messaging service Tu Me, as it's clearly too late to overtake services such as WhatsApp (300 million users worldwide).

Fixed market

Vodafone added 4,000 fixed boardband users in the quarter for a total 39,000 (business market included). The gains likely came in FTTH, as Vodafone now offers services on the Reggefiber network. T-Mobile lost 2,000 subscribers (DSL only) for a total 264,000. The number of narrowband users halved to 8,000. Its TV base is growing, up by 4,000 to 49,000.


Vodafone does not report total revenues for the quarter (it only provides a breakdown with annual and interim results). T-Mobile reported revenues down 3.1 percent to EUR 406 million. Vodafone's service revenue (including fixed) fell 4.3 percent to EUR 449 million and was down 3.7 percent on an organic basis. We estimate the decline in mobile service revenue at 5.5 percent. At T-Mobile, mobile service revenue fell 9.1 percent to EUR 321 million.

ARPU at Vodafone (excluding MVNOs, M2M, visitors) came in at EUR 25.7, down 5.9 percent year-on-year, and T-Mobile (excluding MVNOs, including M2M and visitors) was at EUR 23, down 8 percent. T-Mobile's lower ARPU is due to a higher prepaid proportion as well as the inclusion of M2M and visitors. 

Costs and profit

Vodafone did not provide any additional results. T-Mobile reported adjusted EBITDA down 19 percent to EUR 108 million, hurt by extra marketing costs for its new plans launched in mid-May. The margin fell to 26.6 percent from 31.7 percent. Vodafone is likely to have had a better performance, after reporting a margin in the previous quarter of 37.2 percent. At T-Mobile, and likely also Vodafone, capex is increasing due to the roll-out of LTE. The ratio of capex to sales rose to 13.1 percent at T-Mobile, resulting in free cash flow (EBITDA - capex) halving to EUR 55 million.

The increase in marketing costs was also evident in the subscriber acquisition (SAC) and retention (SRC) costs at T-Mobile. These rose by respectively 34 and 6.5 percent to EUR 137 and EUR 213. 


The differences in reporting cloud the picture (we correct for these in our DMO report). Furthermore Vodafone does not provide as much detail in its fiscal Q1 report. There is no clear winner here: both did well on the postpaid market, while T-Mobile is still more dependent on prepaid. Vodafone's subscriptions with unlimited on-net calls are resulting in an increase in voice traffic and on 05 August it launched its LTE network in the Randstad. On the fixed market, Vodafone is smaller than T-Mobile, but it's growing in FTTH and the enterprise segment. 

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