Djezzy's LTE investment limits impact of drop in ARPU

Djezzy's LTE investment limits impact of drop in ARPU
Substantial increase in data revenue helps telco rebound.

A significant increase in data revenue has helped Algeria's Djezzy limit the impact of Average Revenue Per User (ARPU) erosion from pricing competition, with the VEON-owned operator bumping up its LTE coverage to enhance revenues from mobile broadband.

Global telecom operator VEON said Djezzy's revenue declined by 6.6% to about US$798.5-million in 2018. The revenue decline was narrower in the further quarter 2018 period, having slowed down 1.7% to around US$201.7-million.

The overall drop in revenue was attributed to "price competition, in both voice and data" which had "caused a continued reduction in Average Revenue per User" numbers. ARPU for Djezzy dropped by 7.4% year-on-year.

However, the company's data revenue increased following investment in LTE coverage expansion. Income from data increased by 74.6% to about US$185-million in the full year period after a 67% fourth quarterly increase to around US$46.2-million.

"At the end of Q4 2018, the company's 4G/LTE services covered 28 wilayas and close to 27% of Algeria's population, while its 3G network covered all 48 wilayas and approximately 77% of Algeria┬┤s population," VEON said.

"Data revenue growth was 67.1%, due to higher usage and a substantial increase in data customers as a result of the acceleration in 3G and 4G/LTE network roll-out."

The company added, "This data revenue growth is still supported by the change towards a more aggressive data pricing strategy that has been in place since the beginning of 2018."

Djezzy said the Algerian telecom market remains challenging, with intense price competition, especially in channel-related incentives.

The country's "regulatory and macro-economic environment remains characterised by inflationary pressures and import restrictions", the company stated.

In July 2018 the government raised the tax applied to recharge transfer between operators and distributors from 0.5% to 1.5%" under the Finance Law.

The Law, introduced in January 2018, as well as further tax increases expected in July 2019, is expected to impact telco operations going forward.