Scarlet Telecom's bundled offering of ADSL and telephone services has attracted around 100,000 interested customers in the Netherlands and Belgium, executives at the company told Telecompaper in an interview. Around 65,000 were signed up as customers for the ScarletOne package by the end of 2005, with the customer base split roughly evenly between the Netherlands and Belgium.
ScarletOne clients generate an average revenue per user (ARPU) of around EUR 65 per month. Roughly 35 percent of applications for the product do not end in a contract, due to credit controls, inability to change operators or customers losing interest
Only around 50 percent of the SIM cards included in the Dutch ScarletOne package are activated, generating ARPU of around EUR 30. In Belgium, where mobile services are not included in the ScarletOne offering, the number of mobile subscribers is lower. While mobile is not considered a core product it remains a strategically important offering, the company finds.
In Belgium, where Scarlet claims to be the third-largest operator, the company already has 150,000 DSL connections. Scarlet is working with Alcatel to build a ADSL2+ network and expects to cover around 75 percent of the Belgian population by the end of this year. Outside its own network, it has a wholesale agreement with Belgacom.
In the Netherlands, Scarlet expects to take a decision later this year on building its own network. In addition to bbned, Scarlet has been using KPN's network since November for the ScarletOne offering. The company is currently comparing the cost of constructing a network versus using KPN's network, especially in light of KPN's plans to build a VDSL network before 2010.
Scarlet is also working on building up its distribution network. It has recently started using the Kruidvat retail chain with 705 stores in the Netherlands. The advertising campaign last year has also helped boost its brand awareness to 70 percent from 3 percent a year ago.
According to Scarlet's CFO, the company still has cash left from the EUR 75 million raised from investors last year and the management is open to acquiring other companies or customers. Scarlet used EUR 10 million to buy out a service agreement with MCI and another EUR 25 million to buy Tiscali's Belgian operations, and has also been using cash for the Belgian network roll-out and marketing campaign in the Netherlands and Belgium.
