Second quarter financial results released by parent company, Vimpelcom, show that Telecel Zimbabwe just lost 130,000 active subscribers in the 3 months since the first quarter of the 2014. Considering the company had lost 111,000 subscribers in the first quarter, this means a collective 241k active subscribers lost so far this year. In the second quarter Telecel had 2,329,000 subscribers, down from 2,459,000 subscribers the operator had in the first quarter.
Zimbabwe’s Economic slowdown
We contacted Telecel Zimbabwe for comment, and a director a the company, Obert Mandimika, told us the biting economic situation in the country has meant that subscribers that had multiple sims are finding it hard to maintain all subscriptions and are instead choosing a single network to stick to.
“Our analysis indicates that a lot of customers have been rationalising their multiple SIM holding and choosing to have a specific line instead of holding too many from other networks as it is now difficult to recharge and maintain all of them due to low disposable incomes,” Mandimika told us.
He explained more: “Our case was compounded by the fact that we also rationalised one of our major product offerings, the Super Voice Bundles, at that same time, and some of our marginal low-end bargain seeking customers left the network. However, the core of our subscriber base remains intact.”
If it’s indeed the case of multiple sim subscribers going single sim then Zimbabwe’s mobile penetration has effectively started to drop, to realistic levels.
On how they’ll fix the situation, Telecel indicates the company is doing an about turn on what has been a strong component of the identity; low cost calls for frugal spender. They have learnt over the past couple of years that frugal saves never actually leave their core network and that they just use Telecel for the free airtime promos. This doesn’t help Telecel’s bottom line as they need subscribers spending more overall.
While the company will still have some promos, Mandimika told us that as an organisation, they have also decided “it is better to have focus on improving subscriber loyalty and ARPU (Average Revenue per User) improvement where it is quite acceptable for us to have fewer subscribers but with a higher spending level than to attract those that constantly switch their network based on bargain of the moment only.”
WhatsApp and Facebook Bundles?
We’re guessing that most of the subscriber bleeding was caused by WhatsApp and Facebook bundles offered by Econet. Econet, since October 2013 and February 2014 respectively, has allowed its subscribers low cost bundled access to Facebook and WhatsApp.
Telecel only introduced WhatsApp bundles late at the end of the second quarter and by the time, they’d probably lost a good number of subscribers already. Telecel still doesn’t offer the equivalent of Econet’s Facebook bundles, preferring instead Facebook Zero, which doesn’t look as attractive.
The problem for Telecel is that Econet’s bundles are working very well for it, a sign Econet won’t stop introducing more bundled app services that will likely attract more and more of Telecel’s subscribers to Econet. Take the free Twitter access for example that has just been extended to November.
Not big on financed smartphones
Telecel would likely say they don’t care much for the cheapskates looking for cheap WhatsApp and Facebook bundles coz this is the same lot that looks for free calls, but the fact is the high spenders also want to be taken care of and one of the key ways to do that is to have financed high end devices.
Telecel hasn’t been focused on financed devices at all, or at least not as much as their cousins at Econet have. Telecel devices were bundled with the Telecel Red packages but Telecel didn’t put forward new devices and didn’t have great deals on the few devices they had. They still don’t have the Galaxy S5 for example. No iPhone 5s. And for the devices they have, like the Galaxy S4, because the payback period is 12 months (compared to Econet’s 24 months), the monthly subscription is an enormous US $100.
The only way to keep high spenders on the network and to ensure they do spend high is to give them an expensive device at a very low margin and have them pay it back over 2 years along with a compulsory monthly minimum airtime, and data spend.