We have to talk about Telecel again. Every time we get information on the country’s smallest mobile network operator, the picture gets darker. You would think it can’t get worse than:
But it gets darker, my friend. I wonder what their financial statements would reveal.
We don’t have those financial statements but we have the Postal and Telecommunications Regulatory Authority’s (Potraz’s) sector reports. We will continue to glean whatever we can from them.
I will warn you though, looking at Telecel’s situation is like looking at those pictures where it gets worse the more you look. Much like the picture below:
Some of the problems are; it’s both night and day at the same time, there is a keyhole on the fridge, brooms in the fridge etc. The more you look at it, the worse it gets.
Telecel subscribers
From Q3 to Q4, Telecel lost 16.9% of its subscribers. Going from 469,489 to 389,951 subscribers to close out 2022.
A 16.9% drop in subscribers would be concerning regardless of the circumstances, but when it’s just following a trend, then it’s Armageddon. Just a year prior, Telecel had 533,545 active subscribers and so in a year they lost over a quarter (27%) of their customers.
Over 2 years they have lost 337,143 customers, going from 727,094 in 2020 to Q4 2022’s 389,951, close to a 50% drop (46%).
When we look at Telecel’s performance on this metric against the competition, the picture gets darker still. They now control a measly 2.7% of the active subscriber market share. Down from 5.5% in 2020 and 3.7% in 2021.
Where Telecel dithers around with 390,000 subscribers, Econet has 9,988,105 (69.9%) and NetOne has 3,922,734 (27.4%).
One hopes they are pulling in all-nighters over at Telecel to try and reverse this. There is such a thing as digging a hole too deep you can never escape. With each quarter of decline, Telecel is approaching that stage, if it’s not there already.
Over 5 years here is how it looks:
Revenue per user
One gripe I have with Potraz’s sector reports is that they are not consistent with the data they present. One quarter they give you a metric and the next they drop it.
They used to tell us the revenue split for the three mobile operators, they no longer do. They used to tell us how much voice, data and SMS contributed to total revenues, in Q4 2022 they decided we didn’t need to know all that.
I think it has to do with trying to hide just how dominant Econet is, after all, we have to remember that NetOne and Telecel are both government-owned. That’s my little theory, I have no evidence for it but it makes sense to me.
When we last had some of that data in Q2 2022, we found that Telecel was making only 64 US cents from each customer per month.
Potraz withheld some of the information we need to make those calculations. However, it still looks like the situation has gotten worse.
- Telecel’s share of voice traffic was 0.8% then, in Q4 it was 0.7%
- Telecel’s share of data and internet traffic was 0.5%, in Q4 it was 0.2%
- Potraz didn’t give us SMS traffic share this time around
I don’t imagine Telecel raked in more revenue in Q4 2022, where their subscriber count tumbled, and their voice and data market share also fell. So, in all likelihood, Telecel is now making less than 64 US cents per customer per month.
Revenues
I think we can assume there wasn’t much of a change in revenue contribution per service for mobile operators. In Q3 2022, voice contributed 44.3% and data, 39.2%.
Let’s assume in Q4 voice contributed 45% and data 40%. That would mean, of total sector revenues of ZW$119.5 billion, voice contributed ZW$53.8 billion and data, ZW$47.8 billion. Telecel’s share of that would be:
- Voice (0.7%) – ZW$376.6 million (US$405,000)
- Data (0.2%) – ZW$95.6 million (US$102,800)
Voice and data contribute around 85% of all revenues and so we can say 85% of Telecel’s revenue is approximately US$507,800. Or a rough 100% figure of US$597,000.
So, if we were able to factor in their actual traffic share of SMS, VAS, USSD etc, we would come up with revenue that does not exceed US$600,000. That’s three months’ revenue by the way. So, monthly revenues of at most, US$200,000.
That means a revenue per user figure of 51 US cents in Q4 2022, down from 64 cents in Q2 2022.
Let that sink in, the average Telecel customer now recharges half a dollar a month. That’s not enough for someone to have a WhatsApp bundle for the whole month.
It is not because Telecel is charging too little, their monthly WhatsApp bundle offers 250MB for ZW$1900. Econet’s offers 240MB for $1833.80. Their weekly USD WhatsApp bundle costs US$1 and so the average customer is not even getting that.
Telecel infrastructure
Telecel has fallen behind on infrastructure. Here is their share of base stations:
- 2G – 13.4%
- 3G – 13.3%
- LTE – 1%
- 5G – 0%
Telecel still has their old 2G and 3G base stations, they were still a contender when those technologies still ruled. By the time Econet became the first to introduce 4G/LTE in 2013, Telecel was struggling and did not manage to install LTE infrastructure.
Now, with data continuing to contribute more to total revenues, Telecel simply doesn’t have the infrastructure to compete. Hence why they have a 0.2% share of data traffic. Without that infrastructure, they will not be able to dig themselves out of the hole they dug for themselves.
The other problem with this scenario is that for those 2G and 3G base stations, Telecel will have the lowest number of subscribers per base station. It could be possible to be the only user connected to a Telecel base station at some point.
That’s why some Telecel subscribers will tell you that Telecel provides the best experience, it may be mostly 3G but when you have a base station to yourself it will beat Econet and NetOne’s 4G which is frankly, mostly disappointing. This is expensive for Telecel.
Having 13% of those base stations but only getting 0.7% of the voice traffic and 0.2% of data means they are underutilising their infrastructure. It costs Telecel more to serve its customers than the competition.
This explains why Telecel is now known for network downtime. Right now, I tried my friend’s Telecel line in Mabelreign and there is no connectivity, at all. It has been the case for months. There’s probably like one person in my neighbourhood with a Telecel line and it doesn’t make sense to fire up their generators to serve that one customer.
It is a vicious cycle. Telecel need customers and to improve revenue per user to be able to offer better service but they need better service to get those customers or get them to spend more.
It’s inevitable
If this keeps on, Telecel will shut its doors in the near future. Something has to give. They have to sort out their shareholder mess, which is mostly responsible for the predicament Telecel finds itself in.
Whoever gets control of Telecel after that will have to fork out billions to revive the sleeping mobile operator. They will have to rebrand, run massive marketing campaigns and that whole shebang.
It will be difficult because here is the situation in summary:
- Revenue per user per month – 51 US cents
- 0.2% of the data traffic market share
- 0.7% of voice traffic market share
- 1% of LTE infrastructure
- 2.7% of the subscriber market share
As bad as that is, you have to remember that it’s getting worse by the quarter.
What do you think about all this? Do you see Telecel turning it around at some point? I am not holding my breath. Or should we just look to licence a different player altogether?
Also read:
Telecel revenues down 95% from 2015 levels, from US$14m to US$0.7m per month in 2022
Should we give Econet, NetOne and Telecel a pass for shoddy service? Maybe
USD LTE data bundles compared. Econet, Telecel, NetOne, Utande, TelOne and Liquid Home
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