Telone, the sole fixed line operator in the country lost subscribers in the third quarter of 2017. Despite the drop in subscribers revenue actually increased. There were some interesting developments in voice traffic too. Let’s dig in.
Number of subscribers fell by 2.3% from second quarter to third quarter. This was after there was a 3.7% increase going from the first quarter to the second quarter.
That Telone lost subscribers is hardly surprising, the country is going mobile and it is increasingly becoming hard for fixed telephony to compete. It actually came as a surprise when the subscriber count increased in the second quarter.
It used to take a lot of patience to be able to get one’s hands on a line from Telone. People just simply jumped on to mobile when it launched and they have gotten by just fine. Convincing those people to come to fixed lines is proving a hard task.
There is hope though. Telone happens to be the sole ADSL provider in the country. ADSL may not be the future but for the moment it has a place at the table. ADSL utilises those old copper lines that were laid out decades ago and for the moment that network reaches some places no other IAP can reach.
You will not find ZOL Fibre in the rural areas but where those copper lines reach, ADSL can be provided. Local authorities as well as educational and health institutions over there can get fixed internet and do not have other options.
The subscriber count has been falling in the rural areas at a faster rate than the urban areas. So if ADSL is rolled out in the rural areas, the decline could be stopped and even reversed.
There was a 1.7% decrease in voice traffic compared to a 16% drop in the previous quarter. The rate at which traffic is falling was reduced but it’s still worrying.
This whole year net on net traffic (Telone to Telone) has been falling. From the first quarter to the third quarter there was a 35% drop. In that time outgoing voice traffic to mobile fell by only about 4%. This is because outgoing to mobile increased by 11.8% from Q2 to Q3 despite falling from Q1 to Q2.
So in just three quarters of a year Telone has gone from having most traffic coming from net on net to outgoing to mobile. Yes, more people call mobiles rather than other Telone lines.
Incoming from mobile increased but it’s still nothing compared to outgoing to mobile and so Telone remains in an unfavourable position as regards interconnection fees.
What is interesting however is that international incoming traffic increased by 12.5% whilst international outgoing fell by a massive 29.8%. Incoming international traffic exceeded outgoing by over 3.2m minutes. Zimbabweans do not need reminding that we have a forex shortage and this state of affairs means Telone had improved earnings from international traffic.
Seeing as the 4th quarter happens to be the one Christmas falls in, we expect international incoming traffic to increase and with it Telone’s earnings from international traffic.
Despite all the declines in subscribers and voice traffic, revenue increased going from Q2 to Q3. Yes, Telone managed to squeeze more from fewer subscribers.
The reason for the revenue increase is likely due to improved revenue collection. Telone deployed staff that went door to door to negotiate with debtors over payment terms.
A whole 10.8% of the revenue in the quarter was attributed to fixed monthly subscriptions. That is the rent people have to pay to have the priviledge of a Telone line. It is hard to know what the 10.8% means because that fixed monthly subscription revenue used to be grouped together with voice revenue.
It cannot have been because of voice revenue per se as voice traffic fell and there was no tariff increase in the quarter. Internet and data’s contribution to revenues actually fell despite voice also falling.
Going forward into Q4 Telone is still pursuing an aggressive revenue collection strategy and this will likely yield results.
The company is still laying out fibre and revenue from that will likely kick in a little later on. When it comes to voice traffic I don’t think there is going to be a resurgence in the future. As it is for mobile operators, voice revenue is falling as cheaper communication solutions are available. Those solutions require internet connection and so Telone fibre is the future and ADSL for the moment can help but it is old technology.