Telstra records financial losses, but Belong’s customer gains are good news
Telstra has had a rough financial year, but the 2020 full year has a major bright spot – Belong. The Mobile Virtual Network Operator (MVNO) has done wonders for Telstra, accounting for the majority of the telco’s newly added postpaid mobile customers and all of its new broadband customers.
Aside from that, Telstra’s year has been marked with losses. The telco recorded a 6 percent decline in revenue. However, Telstra’s expenses declined as well – by 14.5 percent – which was enough to mitigate the revenue loss and result in a welcome increase in Earnings Before Interest, Tax, Depreciation and Amortisation (EBIDTA). But even that bit of good news wasn’t that great – the telco still recorded a 14 percent decline in profit.
MVNOs are gaining traction in Australia
MVNOs are smaller operators that buy the major telcos’ networks wholesale, and then resell to consumers. They typically have smaller, more targeted offerings, and they don’t have the high overhead costs that major telcos have. These factors enable them to offer some really attractive, cheap deals.
Australia has a number of MVNOs, which makes the market very competitive. This also leads to many SIM plans being offered at great prices along with promos as they try to grow their customers. As a result, MVNOs, in general, have been showing huge growth in the Australian market over the past few years.
MVNOs are capturing market share – for instance, in the first half of 2017, MVNOs accounted for almost half of all new connected plans.
But Belong isn’t the typical, independent MVNO that just purchases wholesale from one of Australia’s major telcos. Instead, Telstra actually owns Belong, although the MVNO still uses the Telstra Wholesale Network, not the full Telstra network.
Belong has accounted for over half of Telstra’s new customers and all of its new broadband customers
While Telstra hasn’t had much financial good news, the telco has gained customers:
- In H1 FY 2020, customer base increased by 159,000, but their postpaid revenue fell 3.6 percent while prepaid revenue fell 13.4 percent.
- The latest 2020 full year (FY 2020) results show that although Telstra has recorded a 6 percent decline in revenue and a 14 percent drop in profits, the telco added hundreds of thousands of new SIM Only customers.
What’s interesting, though, is that the majority of Telstra’s new postpaid customers are actually Belong customers:
- Of the 240,000 new postpaid mobile customers the telco added, 154,000 of them were Belong customers.
- All of Telstra’s new broadband customers were Belong customers – all 80,000 of them.
Final words – What Belong is doing right
Because belong is operated as an MVNO, its plan lineups are more straightforward than Telstra. Belong offers only two simplified SIM Only month-to-month mobile plans, along with broadband plans. Compare that to Telstra’s lengthy lineup.
The simplified offerings seem to be more attractive to customers who just want to get in and get out. Sometimes there’s such a thing as too much choice, and Telstra may represent that. Telstra is aware of this, and has revamped its offerings several times, reducing the number of plans as part its T22 strategy. But even at that, Telstra still has a lengthy lineup, which is expected from a major telco.
This trend isn’t likely to stop anytime soon either, especially with Telstra’s recent price hikes on its SIM Only plans. Even though those price increases come with more data and the usual premium extras, many Australians plan to hold on to their hard earned cash, especially considering the current coronavirus outbreak and resulting economic downturn. For that, an MVNO like Belong is a more attractive choice.
Belong also announced a permanent move to a fully digital customer support team after the coronavirus peaked. The innovative approach should further reduce expenses and put the MVNO in a position to focus more on marketing, another sure way to gain even more customers for Telstra.