17.46 percent Indians have phones as ARPU falls to $7.7

Posted on April 25, 2007  /  1 Comments

Telephony base swells; ARPU continues to dip

New Delhi April 17 Telephone subscriber base of the wire-line and wireless services together reached 189.92 million in the quarter ending December 2006 from 170.02 million on September 30, 2006, showing an increase of 11.7 per cent during the quarter. However, the blended ARPU (Average Revenue Per User) per month for GSM services has declined by 6.2 per cent from Rs 377 in the quarter ended September 2006 to Rs 316 in the quarter ended December ’06, according to performance indicator report released by the telecom regulator.

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1 Comment

  1. The article below shows that despite falling ARPUs Indian mobile companies are still making big profits because Minutes of Use (MOU) and margins has gone up.

    Telcos: Ring in the good times
    Ranjit Shinde, Times of India, April 30, 2007

    [..]The question is, whether this pace of growth is sustainable — even if it does not increase further — given falling average revenue per user (ARPU) and saturation in tier-I markets. The answer is yes, due to several reasons — rising volumes, higher share of value-added services (VAS) and contribution from new segments like broadband and long distance telephony.

    Backed by strong addition in subscriber base, Bharti and Idea reported 59% and 48% jump in revenues, respectively, in FY07. Net profit for both companies soared two-fold or more. Further, both companies staged a robust show in terms of profitability. Operating margin for Bharti leaped from 37% in the previous year to 40%, while for Idea, it remained stable at 37% for eight established circles. This is quite impressive and even better than the margins posted by top IT companies.

    However, one worry for investors is a decline in ARPU. For instance, Bharti reported an 8% drop in ARPU for FY07 over the previous year. In case of Idea, the fall was even steeper at 15%. This was bound to happen since mobile operators are expanding into tier-II and tier-III cities, as penetration levels in circle-A cities is nearing saturation. Also, more than three-fourths of their subscriber base consists of prepaid customers, who yield lower revenues than those using billing services.

    However, the drop in ARPU has not resulted in a concomitant decrease in topline. This is because, though ARPU is declining, minutes of usage (MOU) is rising. For both Bharti and Idea, MOU rose by 10-14 % in FY07. Thus, the volume of services is expanding, even though value is declining. This is backed by a thrust on VAS that includes SMS, MMS, gaming and call management services. Nearly 10% of mobile revenue now comes from VAS.

    This is expected to improve further as these services often provide better margins, since the provision of these services does not require heavy capital expenditure (capex).

    More here: http://infotech.indiatimes.com/articleshow/1980824.cms