It’s another strong quarter for the market leader among telecom players. As per the latest financial results published by Veon, the parent of Pakistan Mobile Communications Limited (‘Jazz’), the number-one-ranked mobile network operator had closed the quarter ended September 30, 2021 with a topline of Rs57 billion, which is an increase of 13 percent over the same quarter last year. It’s a buildup on notable performance in earlier quarters this year.
The main growth driver for Jazz continues to be the expansion of its data business (3G and 4G services) – something which other operators are having mixed success with. Jazz revenues from data services grew 26 percent year-on-year to reach Rs22.5 billion in 3QCY21. This is mainly due to the number of data customers growing by nearly a fifth to 51 million – an increase of 8 million users between September 2020 and September 2021. Jazz strategy to attract high-paying data user continues to remain intact.
Within the pie of data users, the number of 4G Smartphone users crossed 30 million mark during the quarter, up by 40 percent – or roughly 9 million – compared to same period last year. Not only were there many million more data users signed up with Jazz in this period, the average data usage has also increased from 4GB per user in 3QCY20 to 5GB per user in 3QCY21. While this pace of data-related growth is a good omen for Jazz, it may create congestion issues down the line, requiring more spectrum.
The increased concentration of data services in Jazz business, however, does not seem to be having a major, or proportional, impact on the main revenue indicator of ‘average revenue per user’ (ARPU). Compared to Rs242 per user per month in 3QCY20, the monthly ARPU only marginally increased to Rs245 in the quarter under review. In real terms (and also dollar terms), this hardly compensates for inflationary impact and currency fluctuation seen in recent months.
Jazz EBITDA fell by roughly 10 percent year-on-year, however it was more due to accounting changes rather than unfavorable movement in operational expenditures. Compared to an extraordinary EBITDA margin of 62 percent in the analysis period last year, the 3QCY21 margin was in the normal range at 49.6 percent. During the quarter, Jazz capex spending was almost three times as it was in the relevant period last year – the corporate strategy is dependent on adding thousands of new 4G sites to expand network.
At the end of the nine-month period, Jazz topline had reached Rs169.4 billion, showing a strong annual growth of 15 percent, whereas EBITDA had increased by 3 percent year-on-year to Rs78 billion, delivering a 46 percent EBITDA margin. Across the economy, with cost pressures escalating for both businesses and consumers, it is a difficult operating environment to eke out sales growth in a communications business. However, Jazz’s formidable scale should assist it in navigating this period.