The Hindu Business Line : Talk-time down despite fall in tariffs

DESPITE the drastic reduction in tariffs over the past couple of months, the amount of time customers spend talking on their cell-phones is just not keeping pace with expectations.

According to industry sources, although mobile tariffs have hit new lows, the average minutes of usage continue to show a declining trend.

Even though the subscriber base has been increasing at a rapid pace, the decline in talk-time could spell trouble for the operators in the long run, given the steady dip in the average revenues per user (ARPU).

A case in point is the operational results of Bharti, which shows that over the quarter ended December 2003 the average monthly talk-time of post-paid customers fell to 670 minutes from 689 minutes in the previous quarter.

On the other hand, the average talk-time of pre-paid subscribers has only marginally increased to 217 minutes from 216 minutes in the previous quarter.

As a result, the blended average of both the customer profiles is down at 296 minutes from 300 minutes.

In the third quarter, the average ARPU per month of Bharti was down by close to five per cent to Rs 519 from Rs 546 during the previous quarter.

While the decline has been more prominent for the post-paid customer, at Rs 1,326 from Rs 1,428, the ARPU of pre-paid customers reduced to Rs 349 from Rs 355.

The sources also said that this fall in average revenues is on the expected lines, given the tariff wars that have taken place in the sector to woo more customers.

While the rapid growth in the subscriber base has for the moment compensated for the loss in average revenues, to sustain the revenue flows in the long run, the consumer, especially the post-paid subscriber, has to clock more talk-time.

According to the sources, pre-paid subscribers currently account for a majority of the overall subscriber base of cellular operators, but this trend is slowly reversing and with falling tariffs, more customers prefer post-paid connections.

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