Telecom players' Arpu growth falls to 7.5% in FY24, shows govt data

Slow pace of growth precipitated the latest industry-wide tariff hikes

The Average Revenue Per User (Arpu) earned by India's telecom players rose 7.5 per cent in FY24, as compared to nearly 20 per cent in FY23, according to the latest government data.

The yearly telecom sector performance indicators report released by the Telecom Regulatory Authority of India (Trai) on Wednesday shows the overall monthly Arpu for wireless services increased to Rs 149 in FY24, up from Rs 138.7 in FY23. In the preceding year, it had risen 19.9 per cent from Rs 115.17.

The slow pace of Arpu growth had precipitated the latest industry wide tariff hikes, which took effect from July 3, officials said.

Meanwhile, Arpu for postpaid and prepaid services rose in FY24. Monthly prepaid Arpus rose 8 per cent during the year to Rs 146.37, up from Rs 135.47 in FY23.

Prepaid Arpu is a key focus area for telcos considering 92.47 per cent of all subscribers fell in that category in FY24, up from 92.06 per cent in the previous year.

 

"Monthly prepaid services Arpu crossed the Rs 150 mark for the first time in Q4 (January-April) of FY24. This is important for the industry to sustain, but is long way off from the Rs 300 Arpu that is targeted," an official with a private sector telco said.

On a quarterly basis, the monthly prepaid Arpus have consistently risen for more than six quarters, but the pace has been slow.

Monthly postpaid Arpus rose 4.4 per cent to Rs 184.63 in FY24 up from Rs 176.7 in FY23.

This is an equal reversal of the decline seen in the previous 12 months, when it had fallen from Rs 185.15 in FY22. The numbers show postpaid Arpus are yet to reach FY22 levels.

Telecom operators consider the postpaid segment premium and are increasingly focused on converting subscribers into postpaid users.

Average Minutes of Usage (MOUs) per subscriber per month increased 4.7 per cent to 963 in FY24, up from 919 and 879 in the previous two years.

Wednesday's data showed the telecom sector witnessed a 8.24 per cent growth in adjusted gross revenue (AGR), reaching Rs 2.7 trillion in FY24, up from Rs 2.49 trillion in FY23. AGR is the basis on which the Department of Telecom (DoT) calculates levies payable by operators.

The collections from spectrum usage charge (SUC) saw a steep decline of 32.3 per cent, falling to Rs 3,369 crore from Rs 4,968 crore. SUC collections declined in every quarter of FY24 as a result of the government's decision to cease charging the statutory fee on airwaves acquired from the 5G auction held in July, 2022.

Similarly, pass through charges fell by 4.26 per cent to Rs 53,579 crore down from Rs 55,965 crore. However, the license fee collected in FY24 increased by 8.45 per cent to Rs 21,642 crore, up from Rs 19,954 crore.

Market leader Reliance Jio reported the highest AGR of Rs 97,868 crore during the year, rising by 9.62 per cent, while Bharti Airtel saw AGR rising by the highest rate at 12.12 per cent to Rs 80,529 crore.

Vodafone Idea's AGR rose by a marginal 0.79 per cent to Rs 29,605 crore, followed by Rs 8,019 crore paid by state-run telecom player BSNL, who paid 1.92 per cent less than the previous year.