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GSM per user revenues crash

12-May-2004
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GSM per user revenues crash

While GSM (global system for mobile communications) cellular users have enjoyed over 60 per cent fall in tariffs during 2003-04, the operators saw their average revenue per user (ARPU) squeezed by 17 per cent during the last fiscal year, according to an annual report of the Cellular Operators Association of India (COAI). Moreover, the report suggests that the number of low ARPU customers have also increased substantially during the year.

During 2003-04, tariffs for GSM telephony fell by over 60 per cent. This attracted huge numbers of new users, and took the subscriber base to 20.5 million as on March 2004 from 10.1 million in March last year.

But, according to the 2003-04 Annual Report on Revenues, ARPUs & Costs, published by COAI, the growth in low-ARPU subscriber numbers could throttle infrastructure growth. The report does not deal with the alternative mobile telephony — CDMA or code-division multiple access.

The COAI notes that the private GSM operators have reported a 17 per cent drop in ARPU, a key parameter. Over the year, the ARPU for GSM operators has dropped from Rs 523 to Rs 432. More alarmingly, subscribers with a monthly ARPU of less than Rs 500 accounted for 46 per cent in 2003, against only 28 per cent in 2002.

During the last financial year, while subscriber numbers more than doubled, revenues grew by only 30 per cent, mainly because of the entry of low-value users. This could impact rollout of new networks. For example, Bharti alone would need Rs 2,000 crore for expansion of its network in 2004-05.

In fact, Bharti has been able to reach only 20,000 of the 5,50,000 villages across India. According to the COAI report, the ARPU for Hutch and Bharti, the top two cellular operators, was Rs 534 and Rs 454 respectively. COAI director general TV Ramachandran thinks that the only way to move out from this impasse is to start the second phase of telecom reform. Private operators should be allowed to share the rural telecom infrastructure of BSNLat a commercial cost, he said.

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