- Bharti Airtel and Vodafone Idea had introduced the minimum recharge plan last year to increase their ARPU
- Currently, ARPU figures stand between Rs 88 and Rs 100 for telcos
The ARPU or the Average Revenue Per User, an important financial metric for the telecom operators in the industry might improve by 30% in the upcoming December thus highlighting that the industry, which has been witnessing revenue erosion from the past two years, will finally be on the path to attaining financial health. As per an ET Telecom report, Neil Shah, research director, IoT, mobile and ecosystems, at Counterpoint Technology Market Research said that currently ARPU figures of Bharti Airtel and Vodafone Idea are hovering between Rs 88 and Rs 100 and by the coming December they should be resting around Rs 130.
Rising ARPU Helped by Minimum Recharge Packs
According to the industry experts and insiders, the increase in the ARPU will come because of the introduction of things like the minimum recharge plans which make it mandatory for the prepaid customers to recharge their numbers monthly thus virtually ending the lifetime free incoming calls. The telecom operators have also made changes to their plans and revised some of the rates, for example, the largest telecom operator Vodafone Idea and Bharti Airtel have increased international roaming tariffs.
Shah further added to his statement saying that people are continually upgrading their smartphones to drive data consumption. “People are willing to pay more for these services,” he said. “Their data consumption is expected to go up from 1-1.5 GB per day to 2 GB per day by the end of this year, and this means they will be ready to absorb any increase in prices.”
Postpaid Subscribers to Pay for Better Services
Bharti Airtel chairman, Sunil Mittal said that the industry should aim for ARPU levels which hover around the $3 mark. Rajan Matthews, who is the director general of Cellular Operators Association of India (COAI) which represents all the major telcos of the country said that now the consumers are increasingly more focused on quality rather than affordability. He said that there have been instances where consumers have clocked in an average ARPU of Rs 180, so it is not the case that it is beyond consumers’ affordability. Matthews added to his words that now there is an opportunity for operators to review optimal ways to increase tariffs. He also pushed for enhanced network quality and said that applications which are free now could be chargeable in future.
Matthews also remarked that higher-paying postpaid subscribers might be the first ones to adapt with a little highly priced services in return for more quality of service. “Enterprise offerings will be another opportunity for bundling enhanced value and tariffs,” he said.
To weed out the non-paying subscribers, Vodafone Idea and Bharti Airtel had introduced minimum recharge plans starting at Rs 35 with 28 days validity. Although these recharge plans led to shedding out of subscribers, they have certainly started to show positive results too as the ARPU can be seen coming back on track slowly as highlighted in the reports of October – December quarter.