Benchmarks, Estonia, Latvia, Lithuania

Price erosion and low customer loyalty put mobile operators in Lithuania, Latvia and Estonia under pressure

LTLVEEPress release

For two years in a row, leading operators in Sweden, Finland and Norway have been benchmarked against a local operator peer group through a practice led by tefficient. The results reinforce the rationale behind local benchmarking: In order to improve, operators need focused, fact-based and local input.

It’s time to give a similar tool to mobile operators in Lithuania, Latvia and Estonia.

“We strongly feel something needs to be done”, says Allan Greve at tefficient. “Very little analysis focuses on the specifics of these three markets and we intend to change this.”

Analysis, France, MVNO, sub-brands

Impact of operator sub-brands on MVNO businesses

subbrands FRWe look at what happened to the MVNO businesses when Orange, SFR and Bouygues launched their sub-brands Sosh, Red and B&YOU during second half of 2011 in preparation for the announced launch of Free mobile.

MVNOs were once the challengers typically differentiating through targeted segmentation or price – or both. With the emergence of MNO sub-brands one could fear for what happens to MVNOs in a market.

Download analysis: tefficient public industry analysis 3 2014 Impact of sub-brands on MVNOs

Blog, TV, UK

BT Sport: 450 MGBP spent this year. Does it pay off?

Since last year, BT is on a route so far not tried by other telcos. In August 2013, BT Sport was launched: A new TV channel which acquired the exclusive rights to show many of the Premier League football games in the UK. Previously, these rights were with satellite and TV provider Sky.

BT broadband before after BT Sport

If you want to see Premier League football, you need to become a customer of BT Sport. But that isn’t BT’s primary proposition: Instead, they want you to become a BT broadband customer – since then you get BT Sport included for free. BT uses the sports rights as a tool to strengthen their retail market share in fixed broadband and TV. And that’s an innovation.

The graph shows how BT’s broadband net adds have developed: In a mature market, BT adds more broadband customers after the BT Sport launch than before. 6,8 million customers in June 2013 grew to 7,3 million in March 2014.

But is comes with a high price: In its year to March 2014 report, BT says it spent 450 MGBP (or 3,6% of the total OPEX of BT Group) on BT Sport during the year. Programming rights were 203 MGBP of this. All this is OPEX; the BT Sport related CAPEX was spent last year.

In March, BT had 3 million direct BT Sport customers. In total, BT Sport is in 5 million UK homes. The additional 2 million come via the wholesale agreements BT later have done with e.g. Virgin Media and Sky. Even though these agreements bring revenue to BT (BT Sport e.g. costs 12 GBP per month if you are a Sky customer), they work against the idea of using BT Sport as an acquisition and retention tool for BT broadband.

Future will show if BT Sport became a game changer for BT. So far, it’s been a lot of money: Roughly 3000 GBP of OPEX per additional broadband net add since the BT Sport introduction.

Analysis, Blog, Fixed-mobile convergence, TV

Quad-winds blowing from Southwest Europe

Quad wind direction3At tefficient, we’ve built a comprehensive before/after analysis framework of the results operators have achieved when transforming their offers from single-service to quad-play.

There are many indications that quad-play is about to become the new European standard: Telekom will go quad-play in Germany during 2014; Vodafone has acquired Kabel Deutschland and Ono to go beyond mobile-only; TeliaSonera reorganised 1 April to converge fixed and mobile on a national basis.

Quad is propagating over Europe with south-westerly winds. The map above shows the wind direction: From Portugal, Spain and France towards Central and North Europe.

Quad pyramid

The first step towards true quad is often what we call light quad – a discount that a customer gets if he or she adds mobile to triple-play. In this case, it’s typically not very prominent in operator’s marketing, there’s typically no product brand name, and far from the straight-forward pitch of true quad operators.

The current position of European operators – who have quad capability – is seen in our quad pyramid above. The arrows indicate operators that are seen to take action to move upwards.

Through our before/after analysis, we’ve spotted several very interesting outcomes – best as well as worst practices. These can be used to either prepare your own journey into quad – or understand how to best defend against quad-capable competitors.

Analysis, Churn, equipment sales, SAC and SRC

The art of balancing SAC and SRC

salesmen 100x80This is our fourth analysis on subscriber acquisition cost (SAC) and subscriber retention cost (SRC). Previous SAC & SRC analyses showed that an increase in SRC had a positive effect on contract churn without any negative effect on EBITDA – as long as not exceeding 100% of contract SAC.

Our new analysis shows that much has happened in 2013: Average unit SAC and SRC have decreased significantly. How come – and what has it led to?

Based on data from 35 mobile operators in 24 mature markets globally.

The analysis comes in two versions: A public version which you can download below – and a premium version which adds country-specific SAC & SRC analyses on eight countries: France, Germany, Poland, Austria, the Netherlands, UK, Denmark and Canada.

Download public version: tefficient industry analysis 2 2014 SAC vs SRC – public version

Analysis, Benchmarks, Netherlands, References

Presentation on benchmarking and the Dutch mobile market

Analysis & Consulting, 2014

Allan NLPresented to the members of the Ambassadors of Telecom organisation in the Netherlands 13 March 2014. The title was “Benchmarking – and the tale of a wing clipped Dutch opportunity”. In addition to tefficient’s approach to benchmarking, we discussed if there is a mobile data dilemma in the Netherlands (comparing to the rest of the world).

The presented slides can be viewed here.

Analysis, Consulting, data monetisation, Go-to-market, References, Shared plans

Shared plans: Providing fact-based recommendations

Analysis & Consulting, 2014

How have mobile operators introduced single- and multi-user shared plans in USA, Sweden, Finland, Norway, Denmark, Canada and the UK? Which business results have operators achieved and how has competition reacted? Which modifications have been necessary and when? Can the same customer loyalty effects be achieved without the heavy implementation of multi-user shared plans? Which defensive actions have proven to be most successful?

Based on these international facts and best practice, what would tefficient recommend? Taking local conditions, operator strategy and market position into account.

Commissioned twice by two different operators.

Analysis, Austria, Blog, SAC and SRC

A1: “Historic low” churn comes at a cost (SRC)

A1, the Austrian incumbent, today reports a year-on-year EBITDA decrease of 19.4% for 2013. In this situation, you have to highlight the positives. Telekom Austria group is e.g. saying: “A1 Premium Monthly Churn Rate at Historic Low“.

By now, our industry should have learned that churn figures never can be referred to without also referring to the subscriber retention cost (SRC). It’s simple to decrease postpaid churn – if you have deep pockets: Pay higher SRC to get more customers to stay.

So since Telekom Austria hasn’t done it – let us plot postpaid churn against SRC. It’s the graph below.

A1 churn SRC dev 2011-2013

In 2013, A1 has been able to reduce postpaid churn to below 10% on annual basis which – internationally compared – is very low. But starting Q4 2012, A1’s SRC elevated from around 140 EUR to about 170 EUR. This happened at the same time as smartphone price points started to come down which, in other markets, was positive for SRC. The reason to A1’s increase must therefore be found in the local market: In January 2013, ‘3’ incorporated Orange to become a strong number 3 in Austria.

A1 churn SRC dev 2011-2013 with competitors

But how good is A1’s churn rate? If we plot the figures of T-Mobile and ‘3’ into the graph just above, we can see that competitors report as low churn as A1. (Prior to adding Orange, ‘3’ was even at annual churn levels below 3%). T-Mobile has followed A1’s SRC upwards, but from a lower level. In a local perspective, A1’s achievements seem in line or even substandard.

Note. T-Mobile and ‘3’ have not yet reported Q4/2H 2013. ‘3’ doesn’t report SRC.

Analysis, equipment sales, smartphone OSs

Why more operators should care about alternative smartphone OSs

Alternative smartphone OSsOf global smartphone shipments Q3 2013, the four major operating systems stood for 99.4% – entirely dominated by Android. Why on earth should telecom operators then care to support the remaining 0.6%? Like Firefox, Tizen, Ubuntu and Sailfish?

Yet some operator groups, often with exposure to maturing markets, are actually doing a whole lot to breed viable alternatives to Android, iOS and Windows Phone. Why?

It’s not just about cost. In the established ecosystems, operators see the risk of being squeezed out. Partnering with providers of alternative smartphone OSs can re-establish operators in the ecosystem and give back control over the end-user experience.

Download analysis: tefficient public industry analysis 1 2014 alternative smartphone OSs

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