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Ncell Axiata, one of the leading telecommunication companies in Nepal, suffers a massive loss in the company’s revenue this year 2020. The revenue decrease rate continues more than that of the first quarter of 2020 in the second quarter. Along with company revenue, the number of users and ARPU (Average Revenue Per Unit/User) also declined.
The major reason for Ncell’s struggle to increase the company revenue for the last three months is the impact of the COVID-19 pandemic. Ncell couldn’t meet the revenue of the same period of the last year by a considerable gap. Let’s find out how much loss does Ncell has to suffer in the second quarter of the current year.
According to the Financial report of the second quarter, Ncell suffered a loss of Rs. 5 billion in the company’s total revenue, which is a drop from Rs. 14 billion last year. The revenue of Ncell shrunk by Rs. 5 billion resulting only Rs. 9.54 billion profit this year due to the lockdown period.
In the second quarter of 2019, Ncell managed revenue of Rs. 14.32 billion. However, this year, the company’s revenue declined. In the first three months of last year, the revenue was Rs 13.52 billion, while in the same period of the current year, it was only Rs 12.39 billion. In this regard, the company had also incurred a loss of Rs 1.48 billion in the first quarter.
Following is the list of factors that led to a loss in profit and revenue of Ncell in the second quarter of this year 2020:
In the second quarter of the current year, revenue per customer declined drastically. According to the report, the average income per customer per postpaid is Rs. 253, and the average income per customer per prepaid service is Rs. 189. The average income per customer in postpaid was Rs. 559 in the same period in 2019, while the average income per customer on prepaid was Rs. 282.
In the first quarter of the current year, the average income per customer per postpaid was Rs. 390, and the average income per customer per prepaid service was Rs. 230. It means within three months period, Ncell has lost Rs. 137 as revenue per customer in postpaid and Rs. 41 in prepaid.
The number of Ncell users also decreased in the second quarter of this year. Ncell has 4 lakh 78 thousand subscribers in Postpaid and 1.54 Crore, 44 thousand subscribers in prepaid lately.
In the first quarter, though the company added more than 100,000 customers to its 315,000 customers on the postpaid side, the number of prepaid customers dropped sharply. In the first quarter, there were 16.85 million prepaid customers, but the number fell by about 1.4 million. So, the total user number of 17.17 million in the first quarter declines to 15.92 million in the second quarter.
The operating expenses of the company have also increased in this period. It is also due to the Company’s continued efforts for maintaining its network while protecting the working personnel from the virus infection. The company’s operating expenses were 41.7% in the first quarter of 2020 which is now increased to 49.7%.
Read the normal period Challenges of Telecom operators in Nepal.
The company’s revenue dropped by 39.2% mainly due to extended lockdown, and the expenses due to the regulatory requirement to provide free of cost bonuses, recharge, and data services to the customers. As a result, EBITDA slipped by 47.8% and PAT decreased by 93.2% for the second quarter.
Ncell has also been providing the eLearning package to its customers, in the name of the Student Plan.
The share of data service in the total revenue of the company has been steadily increasing. Compared to the first three months of the current year, the data share increased from 4 percent to 26 percent.
It means that Ncell has earned Rs 2.48 billion from data sales in the last three months. In the second quarter of last year, the contribution of data was only 22 percent. Although the percentage of data contribution to total revenue has increased, the company’s revenue from data consumption has declined. This proves that the revenue from voice is quite significant.
In the second quarter of last year, the revenue from data sales was Rs 3.15 billion. In comparison, the revenue has decreased by Rs. 671.37 million in the same period of this year. Find all of the data plan/packages in Ncell, to choose the best one for your internet requirement.
The data volume usage in the second quarter has also surged significantly with a 43.8% increment as compared to that of the first quarter. This is due to the people relying on cellular data in remote areas, new affordable data packages, and the expansion of the 4G network.
Axiata’s performance slowed down as a consequence of the COVID-19 pandemic, mainly in the second quarter of the current Fiscal Year. The operating companies in Malaysia, Bangladesh, Sri Lanka, and Nepal suffered a massive loss in their revenue, due to the lockdown. It shall manifest on two fronts: Lack of accessibility to sales and services as the physical outlets shut down, and foregone revenue arising from free data provided by the operating companies.
According to the report, most operating companies except Nepal have opt-out of the loss. Nepal is finding it hard to achieve the pre-lockdown revenue level in the second quarter this year, which is mainly due to extended lockdown, and the expenses due to the regulatory requirement for free offers to the customers.
Ncell of Axiata Group’s revenue lost Rs. 5 billion in the second quarter of the current Fiscal Year due to extended lockdown. As the Nation is still battling with the coronavirus outbreak, its adverse effect is seen in the economic status of Ncell in disturbing financial numbers. Although voice service was a loss, data service helped gain revenue to some extent.
As the lockdown eased in other countries, Axiata’s operating companies have tracked down the pre-lockdown revenue level in June 2020. So, we still have hope that once the lockdown ends, Ncell can work effectively and recover the losses.
Tell us what do you think of the revenue loss of Ncell in this Q2, 2020. Earlier Nepal Telecom’s profit margin was also cut back due to the pandemic reason.