The Q3 results just reported by Telia Company, Telenor, Tele2, 3 Scandinavia and Elisa show that it’s quite difficult not to be successful as a Nordic telco today.
Revenue and ARPU is growing. OPEX grows too, but slower than the revenue, so the EBITDA margins are increasing. Churn is decreasing. CAPEX is in decline. More cash is being generated.
We have identified seven signs that competition in cooling down in Nordic telco.
Sign 1. Mobile ARPU grows
Let’s start with Norway. The reported blended mobile ARPU has quite steadily increased for the two MNOs that still report it. For Telenor it grew 4% year-on-year to Q3 2023. For Telia it grew 3%.
In Sweden, the ARPU development has been a bit more dramatic than in Norway. Three players, first 3, then Telenor and the B2B side of Tele2, witnessed their ARPUs going down from 2018 to the first half of 2021. A corona effect, you might say. Not really; it started before corona started (Q1 2020) and compare with Telia who could keep their ARPU steady or even increase it when 3, Telenor and Tele2 B2B seemingly fought a battle on price.
Fiberalliancen is a trade association for companies that own, operate and use fibre networks in Denmark. It is a part of Green Power Denmark.
For the third time (previously done in 2021 and in 2022), Tefficient has performed a comprehensive fibre broadband pricing benchmark covering nine European markets: Denmark, Sweden, Norway, Finland, Germany, the Netherlands, Belgium, the UK and France.
In a press release, Fiberalliancen introduces Tefficient’s analysis and makes it publicly available. Download it from the right ‘Dokumenter’ column. It’s in English.
The release concludes that:
Denmark has some of the lowest consumer prices for both new and existing fibre connections.
Danish consumer prices – both for new and existing connections – have overall fallen from 2022 to 2023. This is only seen in Denmark and the Netherlands.
Tefficient’s approach has been thorough and the results are presented in a set of graphs like below.
Example graph from the analysis showing the total 2-year fee for the new build fibre case. The red trend line highlights Denmark’s position.
Since the onset of inflation in Europe at the beginning of 2022, Tefficient has been reporting on its progress through a series of LinkedIn posts and tweets. We have compared the overall inflation to the inflation within the ‘Communication’ component of the European Central Bank’s Harmonised Index of Consumer Prices (HICP).
The ‘Communication’ component closely reflects telecommunication prices, encompassing telecommunication services and equipment, albeit also including postal services. In August 2023, it accounted for 2.7% of the expenditure weight in HICP for the Eurozone.
If we rewind to a year ago, Europe’s telecommunications companies had a significant ‘inflation deficit’ when compared to the overall inflation. The graph below illustrates the gap between: