Mobile ARPU hits seven-year low

The Average Revenue Per User (ARPU) for mobile service providers has hit a seven-year low, falling to ₹79 in FY17. After a steady rise between 2010 and 2015 when the ARPU rose from ₹105 to ₹123, the steep decline coincides with Reliance Jio’s entry into the market.

The ARPU figure stood at ₹79 in FY17, down from ₹123 in FY15. This is despite the fact that data usage per subscriber per month, is up from 51 MB in 2013 to 1,945 MB in 2017. The number of smartphones have also gone up from 507 million in FY16 to 650 million in FY17. This would suggest that subscribers are using increasing amounts of data and buying more phone units than ever before, yet revenues continue to fall.

Hemant M Joshi, Partner Leader, Technology, Media & Telecommunications, Deloitte India, told BusinessLine, “The revolution of technology, accelerated by the arrival of the new operator, led to competitive pricing in the market and reset the paradigm. If you see the long-term trend, even before this event, it has been falling.”

From the time mobile services were launched, it started with ₹36 per minute for calling and has been falling in the long-term and fallen to about half a cent per minute. “Voice calling is essentially going to be free. Technology changes are happening and nobody can stop this. We may come to a situation where you just pay for data and everything else is free,” Joshi said.

On the increase in data usage, he said, “Data usage has gone up 10-20 times but prices have gone through the floor. We have the lowest price per MB in the world now. Therefore, though the usage is high, the revenues are low because the prices are down significantly. Again, because of the technology and disruption caused by the new operator,” he added.

In the near future, ARPU is expected to continue to see a downward trend. Rajan S Mathews, DG, Cellular Operators Association of India (COAI), said, “Sharp decline in voice and data tariffs has resulted in the substantial reduction in the ARPU. The ARPU for March 2018 is estimated to be ₹72 and we expect it to remain around the same.”

Industry experts said that the Centre needs to treat telecom as a strategic industry and help operators with fiscal relaxation if consumers have to keep getting affordable services. “Once the consolidation is over then the remaining 2 or 3 players will be forced to increase tariffs if the government does not come to the rescue. Various levies and taxes like spectrum usage charge needs to be waived immediately,” said an industry expert.

The writer is an intern with BusinessLine