A worsening economic environment and rising tariff competition in Algeria has impacted on mobile operator Djezzy and said to be the main reasons why its Q1 2017 revenue was down by 15%.

Slow growth in subscriber numbers and market price competition is said to have lowered average revenue per user (ARPU) numbers.

Revenues declined 15% to US$231.7 million after a drop of 3.2% in subscribers to 16.1 million compared with the prior year's contrasting period.

However, data revenue organic growth has remained strong due to "the higher usage and substantial increase in data customers as a result of the 3G and 4G/LTE network" roll-out.

Income from data amounted to US$25.4 million, representing a 58% increase.

Djezzy's parent company Veon, formerly VimpelCom, expects the pressure on operations to continue.

"Djezzy continued to face customer churn and ARPU erosion, the latter exacerbated by price competition. The company expects this pressure to continue, as it will take time to stabilise its commercial proposition and its customer base," Veon said.

Algeria's challenging macro-economic environment, characterised by an accelerating inflation rate, has also affected the local mobile operator's performance. In February this year, the inflation rate in Algeria rose to around 8%.

The North African country has increased the VAT on data services from 7% to 9% since the beginning of this year. Taxes on top ups have also been hiked from 17% to 19%.

"These higher indirect taxes influenced Djezzy's performance in relation to both revenue and EBITDA as these taxes could not be passed on to customers," Veon said.

The company has confirmed the action it will take to try to improve performance and stabilise Djezzy's subscriber base, including distribution transformation and mono-brand roll-out, accelerating its 4G/LTE network deployment, promoting micro campaigns with tailored services, data monetisation activities and smartphone promotions coupled with bundle offers.

The 3G roll-out across all of Algeria's 48 wilayas has been completed, the company confirmed. This was after the company utilised about US$26.3 million in capital expenditure during the first quarter period buoyed by a strong operating cash flow margin at 38%.