Telecom KPIs: ARPU, EBITDA and IFRS 18

Telecom KPIs for an illustrative operator

The 120 of lease depreciation and interest would have been operating costs before IFRS 16. EBITDAaL puts them back, making the figure comparable with pre-2019 results and with US operators reporting under ASC 842.

How is ARPU defined?

Usually service revenue, excluding equipment sales, divided by the average number of subscribers, per month. Definitions vary: some operators include interconnect revenue or exclude machine-to-machine connections, and the IFRS 15 allocation of bundle revenue between handset and service lowers reported service ARPU compared with the monthly bill. Comparing operators requires checking each definition.

What is blended ARPU?

Operators often report ARPU separately for postpaid and prepaid customers, because postpaid ARPU is typically several times higher, and a blended figure across both. A shift in the customer mix towards postpaid raises blended ARPU even if no individual customer spends more, so the split matters when analysing trends.

What is churn?

The percentage of subscribers who leave in a period, usually monthly. Churn feeds directly into the accounting: it sets the amortisation period for capitalised commissions and the life of customer relationships acquired in mergers. See dealer commissions.

What does IFRS 18 require for telecom KPIs?

From periods beginning on 1 January 2027, a subtotal of income and expenses that an operator uses in public communications outside the financial statements to give management's view of performance, such as EBITDA or EBITDAaL, is a management-defined performance measure. The operator must disclose it in a note, explain why it is useful, reconcile it to the most directly comparable IFRS subtotal, and show the tax and non-controlling interest effect of each reconciling item. EBITDA itself has a specific exemption only when calculated as operating profit before depreciation, amortisation and specified impairments. Non-financial KPIs such as ARPU and churn are not covered. See management-defined performance measures.

Why does capex intensity matter?

Operators spend a large share of revenue on networks every year, so EBITDA overstates cash generation. Capex intensity, and EBITDA or EBITDAaL minus capex, show how much is left for debt, spectrum and dividends. Capitalisation policies affect the comparison: an operator that capitalises more labour reports higher EBITDA and higher capex.

How do KPIs relate to segment reporting?

Operators with several countries or business lines report segment results under IFRS 8, usually measured on the basis management uses, often EBITDA. The segment measure must be reconciled to the group's profit, and if it is also used in public communications as a management view of performance, the IFRS 18 disclosure applies alongside.

What are common pitfalls with telecom KPIs?

Comparing EBITDA across operators with different lease structures or capitalisation policies; comparing ARPU without checking whether it includes equipment or interconnect revenue; and treating EBITDA minus capex as free cash flow while ignoring spectrum payments, lease principal and tax.

Where to go next

See IFRS 16 for telecom sites, telecom revenue recognition and telecom accounting.

This guide is general information. It is not tax or legal advice for your situation.