Norwegian mobile operator Ice Group has announced positive adjusted EBITDA for the second quarter in a row in Q2 2020 and extended its customer base for the 21st consecutive quarter. Smartphone service revenue was up by 19 percent year on year and the operator has a 10 percent market share. It announced talks for more funding and will release details about this once they have reached a conclusion.
Total service revenues rose to NOK 460 million in the second quarter from NOK 394 million a year earlier. Smartphone service revenues reached NOK 379 million, a 19 percent increase over Q2 2019, driven by the growth in smartphone subscribers. Adjusted EBITDA was positive at NOK 2 million compared with a negative NOK 46 million in Q2 2019. Capital expenditure was NOK 161 million, down from NOK 312 million a year earlier.
CEO Eivind Helgaker said that Ice has reached a 10 percent market share and that its mobile network now covers more than 90 percent of the population. It is confident that it will hit its target of a 20 percent market share in the medium term, he added.
Helgaker said Ice received the final decision in June about allowing it to defer approximately NOK 550 million in frequency payments from the 2019 auction to the Norwegian state, significantly reducing its funding need. He added that Ice is in advanced talks on additional funding, and management is positive that this may be accessible in the coming period. Ice Group will inform the market about this as soon as it has concluded the process.
The CEO said Ice’s on-net share of data and voice traffic rose again in the second quarter, mostly driven by network extension and the positive effects of the Apple agreement. There is still an upside when the Apple agreement is expected to be implemented in full in H2, he said. The deal with Apple signed last year concerns handset sales and marketing and enables automatic phone settings for iPhone users with an Ice subscription.
On-net data for Q2 ended at a record high 84 percent while on-net voice traffic increased to 43 percent during the quarter, peaking at 54 percent at the end of June. The total number of smartphone base stations at the end of Q2 was 2,470, up by 232 during the quarter. Helgaker said Ice has a good pipeline of ready-to-build base stations and it is still targeting up to 1,000 new base stations in total in 2020.
Ice Group reached 598,000 smartphone subscribers by 30 June, an increase of 15,000 during the quarter. The number of mobile broadband subscriptions was 84,000, down from 85,000 a year earlier.
The sale of subscriptions was hit by Covid-19 and the resulting restrictions in Norway, especially affecting retail sales. Ice is already strong in digital sales and it has been able to raise online sales further during the outbreak. Investment in digital sales channels will increase in future, and Ice’s share of number portability in the market has been stable at well above 20 percent in recent months.
Smartphone churn was negatively affected early in the second quarter by price adjustments for Ice Group’s 1 GB subscription from 01 April, and ended at 24 percent. It has taken steps to reduce churn and seen good results so far.
Smartphone ARPU for Q2 was NOK 222, a NOK 2 increase from Q2 last year but affected by the loss of international roaming due to Covid-19 travel restrictions, and lower regulated prices for voice interconnections. Underlying subscription revenues were up by about NOK 10, indicating success in targeting the medium and high usage segments more efficiently.
Nkom’s new telecom regulation (Market-15) was implemented on 01 June and benefits Ice Group as it will lower Ice’s national roaming costs in the next agreement period. The decision imposes stricter regulation on site sharing, too, which will benefit Ice Group during its current expansion phase.
Ice is currently negotiating with the two other network operators in Norway regarding the roaming agreement from 01 April 2021, and it expects to achieve significantly better terms than in the current one. The new linear pricing model will allow Ice to optimise site location and gain higher capital returns on the network investments in future.
