You are here: Home » Technology » News » Apps
Business Standard

New telecom firms' revenue streams turn into trickle

Surajeet Das Gupta & Mansi Taneja  |  New Delhi 

The average revenue per user (ARPU) of the country’s four new GSM operators who got licences in 2008 — Uninor, S-Tel, Videocon and Etisalat DB — was between Rs 8.50 and Rs 39 in the January-March quarter.

The four have already invested Rs 13,000 crore to date.

These figures were shared by the companies with members of the Cellular Operators Association of India. While Uninor operates in 13 circles, S-Tel has operations in five, Etisalat-DB in 15 and Videocon in 13 circles.

The ARPU of all GSM operators combined was Rs 118. This means the ARPU of Uninor (Rs 39), the best performer among the four, was one-third the industry average. Videocon’s ARPU of Rs 8.50 was one-thirteenth the industry average. Etisalat DB’s ARPU was Rs 26.75 while STel’s was Rs 25.99.

The new operators have come under fire for violating procedures. While investigative agencies accuse them of getting spectrum at rock-bottom prices, many have asked the government to take back the spectrum and return the licence fee.

While the GSM operators (excluding Tatas & Reliance Communications, which do not announce GSM and CDMA numbers separately) saw revenues rise only 2.51 per cent to Rs 16,650 crore in January-March over the previous quarter, their ARPU fell 6.85 per cent.

Experts say such low ARPU does not even cover the cost of acquiring a customer, which is Rs 300-400.

“With an ARPU of Rs 300, it takes a whole year to recover the cost of acquiring a customer. After that, before you know, the customer would move to a competing player,” said a senior executive of one of the new companies.

Srishti Anand, an analyst at Angel Broking, says, “The new players are offering low tariffs to attract subscribers, which is why they are operating at such low average revenue per minute. They also don’t have a pan-India presence. Their operations are unviable and it will be difficult for them to recover the costs.”

Anand says the only way out is consolidation as empirical evidence shows that high-ARPU customers are not shifting to the new players.

But Uninor defends its low ARPU. “For a young operator like us, ARPU is not a very relevant measure. We are more often the 2nd, the 3rd or even the 4th SIM in the hands of our customers, which means the customer spend is not going to a single operator anymore.

First Published: Thu, June 23 2011. 00:18 IST