The Hindu Business Line : Lifetime offers may dent ARPUs for operators

THE plethora of lifetime pre-paid mobile card and lower mobile tariffs on offer may be the perfect New Year's gift for subscribers, but for the operators it could mean drastic fall in average revenue per user (ARPU), prompting Airtel to change its business model based on average revenue per minute (ARPM).

Already, with an ARPU of less than $8, Indian operators are among the few in the world with single digit average revenue per user.

"We are taking the affordability platform where our objective is to reach mobile services to every corner of the country. We do not follow the ARPU model but we follow the ARPM model where the value of a subscriber, who pays Rs 600 a month and another who pays Rs 300 a month, is the same. For us profitability is the revenue that we get per minute minus the cost incurred per minute," said Mr Manoj Kohli, President (Mobility) Bharti Tele-Ventures.

Idea Cellular is taking a more conventional approach and is banking on growth in subscriber base and lower churn in the pre-paid segment.

"We do not expect any negative impact because of the lifetime offer. These packages will bring in subscribers who have so far been hesitant to take a mobile connection for fear of it being not affordable. Segments like students, housewives and blue-collar workers will now be able to take a mobile. They may not necessarily be low spending segments," said Mr Pradeep Shrivastava, Vice-President, Idea Cellular.

Operators are also banking on the new subscribers to upgrade themselves to use value-added services and data products.

"This is just a way of hooking subscribers to mobile usage. Once they use it for voice services, it will not be long that they start using data-based services such as SMS. That will help in enhancing the ARPU," said a Delhi-based operator.

Apart from a surge in the overall numbers, operators are also expecting arrest the churn in the pre-paid segment.

At present, almost 7 per cent of the pre-paid segment is constantly shifting from one operator to another. A lifetime offer at Rs 999 may keep the subscriber from shifting.

Mr Kohli said: "We expect lower churn in the pre-paid segment with the lifetime offer. That's also because we, as operators, are taking measures to improve the service to our customers."

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