Algeria's Djezzy affirms data-focused turnaround strategy

Algeria's Djezzy affirms data-focused turnaround strategy

Company cites lower overall revenues as the main reason for Q4 2017 results.

Algerian mobile firm Djezzy has experienced a 10% decline in revenue for Q4 2017, based on a q-on-q comparison, and has cited lower overall revenues as the root cause.

Djezzy's parent company Veon said the local mobile phone market continues to represent a difficult proposition characterised by "strong competition and inflationary pressures".

Regulatory uncertainties have compounded Djezzy's problems, including new financial regulation implemented in 2017.

The new tax law had raised VAT charges on data services from 7% to 19% and VAT on voice services from 17% to 19%. Taxes on top-ups increased from 5% to 7% due to VAT increases impacting the industry.

"The higher indirect taxes affected Djezzy's performance in relation to both revenue and EBITDA as taxes could not be passed on to customers," Veon continued.

"Price competition, in both voice and data, caused a continued reduction of ARPU and a year-on-year increase in churn. Revenue decreased by 9.9% year-on-year, in line with Q3 2017 trends," the company added.

Djezzy's service revenue for Q4 2017 amounted to around US$208.8 million. Its subscribers in Algeria decreased by 8% to 15 million, due to competitive pressures in the market, with Average Revenue Per User numbers for the period declining by 4.8%.

By the end of 2017, Djezzy's 4G/LTE services covered 28 wilayas and more than 24.6% of the country's population, while the 3G network now covers all of the country's 48 wilayas.

The company has confirmed it will enforce a turnaround strategy focused on data rollout.

This has been a source of some degree of ROI for the firm after it secured a 36% surge in data revenue for the quarter, attributable to "higher usage and a substantial increase in data customers" as a result of the 3G and LTE internet offering.