The average revenue per user (ARPU) for telecom operators rose during the financial year ended March 31, buoyant on tariff hikes and reduction in free minutes. With the worst over for the sector, ARPUs are set to rise in the current fiscal.
For most companies, the ARPUs — a metric to gauge the financial health of the telecom operator — rose, barring in the second quarter of FY13. Among the listed companies, Reliance Communications was the only company to register a continuous rise in ARPUs during the year.
“The rising trend in ARPUs is mainly due to discontinuation of promotional vouchers, discontinuation of various freebies and reduction in free minutes under various schemes. The operators had posted an increase in Minutes of Usage (MoU),” said Ankita Somani, research analyst (IT and Telecom) at Angel Broking. “There has been a churn of bottomline customers. During the past two-three quarters, operators had begun removing non-revenue earning customers from the network. Even now, multiple SIMs are pulling real ARPUs down,” said Sivarama Krishnan, Executive Director, PwC India.
The second quarter is generally a docile quarter for the sector, Krishnan added.
PINK OF HEATLH
To begin with, Bharti Airtel’s ARPUs rose 4.3 per cent on a quarter-on-quarter basis to Rs 193 in the fourth quarter ended March, compared with Rs 185 posted during the December quarter. (ARPUs are mentioned in rupees per subscriber per month.)
The GSM operator Idea Cellular posted a 5.7 per cent rise in ARPUs at Rs 167 (Rs 158) over the previous quarter. RCom, which straddles both GSM and CDMA services, posted a 7.6 per cent increase at Rs 128 (Rs 119).
“The average subscriber base per operator during the past three quarters has been stagnant, while on the other hand MoUs on the network rose. This has also led to a rise in revenues,” said Shobhit Khare, sector analyst with Motilal Oswal Securities.
“There was a lot of discontinuation of SIMs and a lot of multiple SIM users moved over to single SIMs, but this did not impact the minutes of usage,” he added.
STEADY ARPMS
The Average Revenue Per Minute (ARPM) – another financial metric for a telecom operator – was almost steady during the full year.
In the fourth quarter, ARPM for the country’s largest telecom operator Bharti Airtel (ex-Africa) stood at 0.42 paise, almost steady from the previous quarters of the year. This was also the case with Idea Cellular (mostly steady at 0.41 paise) and RCom (0.44 paise). ARPM is the revenue received from voice calls, while ARPUs include data, voice and other services offered to a subscriber.
FORECAST
Both ARPUs and ARPMs are expected to rise during the current financial year, as operators would continue to reduce non-revenue earning subscribers.
“I am expecting ARPMs to inch up, and this would also lead to increase in ARPUs,” Angel’s Somani said, adding that it is unlikely for telecom operators to re-launch the schemes that were already pulled out.
PwC India’s Krishnan echoes the same. “In fact, ARPUs would grow”. For operators, it is good news.