Vodafone cuts termination rate by third from 1 Sept

26 Jul 2004

Vodafone Ireland is to reduce the fixed-to-mobile termination rate by 33pc. But the fee cut will apply only at weekends and will not take effect until 1 September – the traditional end of the peak holiday season.

The new termination rate – the amount it charges Eircom to complete calls on its network – is 5.97c, down from 8.88c. It compares with termination rates of 12.9c (reduced last year) for peak calls and 11.42c for off-peak. Vodafone said that latest reduction would particularly benefit consumers as during the summer or at holiday times; weekend traffic can account for up to 25pc of total traffic. As agreed with Eircom, this reduction will be passed on directly to consumers making calls from Eircom fixed lines.

“Our announcement today on mobile termination rates further demonstrates Vodafone’s ongoing commitment to bringing value to the Irish telecommunications market,” commented Paul Donovan, CEO, Vodafone Ireland. “Since 2000, Vodafone has reduced mobile termination rates overall by 32pc, or by more than 50pc in real terms. This move ensure that Ireland is one of the cheapest countries in Europe for fixed network to mobile network calls.”

The reduction was announced as the company issued key performance indictors (KPIs) for the three-month period to 30 June 2004 (its second financial quarter). The figures show that Vodafone acquired 18,000 new customers (5,000 post pay and 13,000 pre pay) during the quarter, bringing its total customer base to 1,881,000. This represents the addition of 116,000 new customers in the past year.

The strong increase in its pre-pay business will particularly please the company as corresponding KPIs released by O2 last week showed a fall of more than 2,000 in its pre-paid subscriber base, a drop attributable to the growing success of Meteor’s customer acquisition efforts.

Blended average revenue per user (ARPU) measured on a 12-month rolling basis grew to €591, up from €582 in the last quarter. This compared with €362 in Italy, €309 in Germany and £314 sterling (€475) in the UK for the same period. As has become the norm in recent quarters, the company attributed this difference to more loquacious Irish customers, with a company spokeswoman claiming that voice usage in Ireland is 50pc higher than the Vodafone group average.

ARPU for pre-pay customers grew to €364, up from €361 in the last quarter. For contract customers, the 12-month rolling ARPU increased to €1,150, up from €1,123 in the last quarter. Data as a percentage of service revenues increased to 20.6pc for year to end June 2004.

Donovan said: “These KPIs reflect a positive start to Vodafone Ireland’s financial year, showing an expected initial uplift in ARPU, primarily from an improvement in voice usage.

“This quarter saw a continuing programme of pricing and services innovation, as we became the first operator in Ireland to launch a commercial 3G service and launched the tri-band Blackberry 7230 for corporate customers. In addition, we delivered on a range of new tariff propositions, displaying to our customers our ongoing commitment to reduce costs, innovate and add value.”

During the same period, Vodafone Group Plc’s customer base rose 3.1 million to 139.2 million. Total data revenues increased to 16.3pc of controlled service revenues for the year to June 2004 from 15pc for the year to June 2003; controlled data revenues for the quarter was up 13pc on an organic basis on the same quarter last year.

Sales of Mobile Connect data cards sales increased to over 300,000, including over 50,000 with 3G capability.

Arun Sarin, chief executive of Vodafone, commented: “Overall we feel we have made a very strong start to this year. We have recorded good performances in both customer and revenue growth. With over 139 million proportionate customers, our business is progressing well, despite a tougher competitive environment in some markets. Data revenues continue to increase helped by Vodafone live! where we now have over 9 million controlled customers. These KPIs are in line with our expectations and we are therefore reiterating our guidance for the year to March 2005.”

By Brian Skelly