Telecom units pin hopes on VAS

Kolkata-based telecommunications companies (telcos) are pinning hopes on value-added-services (VAS), as average revenue per user (ARPU) is on a declining trend, following the drop in tariffs.

According to analysts, voice SMS is expected to contribute around 40 per cent to the total revenues of telcos launching this service.

In terms of revenues, VAS currently contributes 10 per cent to the total turnover of telcos and analysts predict that voice SMS would contribute 10 per cent to the VAS revenues.

Industry estimates point out that average revenue per user (ARPU) currently is around Rs 100-750 and varies between pre-paid and post-paid customers.

According to Aircel, the youngest entrant in Kolkata and Bengal circles, its current penetration in rest of Bengal (ROB) stands at 19 per cent.

"With our proposition to the customer becoming stronger with the launch of value added services like GPRS, music-on-demand, CRBT, we will be able to get a significant chunk of high ARPU customers. This gives Aircel ample opportunity to expand its quality subscriber base with a positive rub-off on EBITDA," an Aircel spokesperson said.

A recent Fitch report on the telecom sector pointed out that wireless ARPUs are expected to fall severely in calendar year (CY) 2009 due to increased competition. Also, incremental subscribers are now mainly coming from the smaller cities, who are mostly prepaid customers with lower minutes of usage.

Moreover, with the addition of new players and 3G licence auctions, competition is set to intensify.

Also, the EBITDA margins of most of the Indian telecom companies are set to decline; with falling ARPU in wireless, network expansion costs and regulatory pressures.

However, the impact of the competition is expected to be seen from calendar year 2010, as most of the new greenfield operators have delayed their network launches due to difficulty in raising finance in the light of the tight liquidity situation.

BSNL's pre-paid ARPU for November 2008 was reportedly at Rs 100.28 against the national average of Rs 171.65, while for post-paid ARPU was Rs 151.59 against the all-India average of Rs 477.47.

Airtel's pre-paid ARPU for the Kolkata circle is reportedly at Rs 325 and the post-paid figure is Rs 700.

While for Vodafone, post-paid ARPU is close to Rs 600 and Rs 200-250 for pre-paid, reports indicate.

The BSNL chief general manager in Kolkata refused to comment, while Airtel, Vodafone, Reliance and Tata Indicom did not respond to the questionnaire sent to them.

S K Chakravorty, chief general manager of Calcutta Telephones, had earlier said that the company is banking on 3G services which is expected to help in doubling its subscriber base. 3G services would also enable Calcutta Telephones to introduce more value-added-services as consumers are increasingly looking outside of voice-based services.

Among value-added-services, Vodafone recently launched a range of 'Busy Callertunes' for its prepaid and postpaid customers across West Bengal. With this new 'Busy Callertune' service, Vodafone customers can get personalised callertunes played when they cannot take an incoming call. Different callertunes can be set by Vodafone customers depending on the situation.

Reliance Communications (RCom), known for its innovative and lowest tariff offerings, has launched lowest ever lifetime GSM SIM for Rs 50 for Kolkata customers, valid for six months. Local calls between Kolkata and West Bengal to any Reliance GSM or CDMA will be charged 15 paisa per minute. Local calls to any Reliance phone during 11pm—6am will be charged 5 paisa per minute.

Local calls to any other service provider will be charged 35 paisa per minute. The charge for any STD call is Rupee 1, without any additional monthly rentals. Existing Reliance GSM customers could also avail of the new promotional tariff benefits by charging Reliance mobile with a special tariff voucher (STV) of Rs 49.