The average revenue per user of mobile operators have declined by up to 24 per cent during the period between 2008 and 2011 due to increased cost to support customer service, said a study.
The average revenue per user of mobile operators have declined by up to 24 per cent during the period between 2008 and 2011 due to increased cost to support customer service, said a study. "ARPU (average revenue per user) for GSM operators declined at an average CAGR (compounded annual growth rate) of about 24 per cent between 2008 and 2011, while for CDMA operators ARPU fell at a CAGR of 13 per cent during the same period," said a report 'Envisioning the Next Telecom Revolution' by Ficci, DoT and AT Kearney.
It attributed the decline in ARPU to "rapidly evolving technology environment and increased cost to support improved customer service offerings". It added that competition in the Indian wireless market is amongst the highest globally. Compared to other emerging markets, the number of wireless network operators in the country far exceeds that of China, Brazil, Russia or Korea, the study said.
The largest Indian operator has 20 per cent of subscriber market share and the top three operators cumulatively have less than 50 per cent market share, said the report. In contrast, other emerging markets have at least 80 per cent of the market share cornered by the top three operators, it added. "While the stiff competition has been of advantage to Indian consumers making wireless services more affordable, it has made the ROI (return on investment) task challenging for operators," the report said.
The Indian telecom sector witnessed revenue stagnation in FY 2010 and FY 2011 due to high intense competition, it said. "The situation improved partially in FY 2012, and revenue growth continues to be strong in the current financial year," it said. The report said non-voice revenues of mobile operators will increase to 27 per cent by 2015 from 14 per cent in 2011, of which about 15-20 per cent will come from mobile data, which is expected to grow at 126 per cent.
The voice revenues will decrease to 73 per cent from 86 per cent during the same period. "Proliferation of smart devices is accelerating this shift towards data. In 2008, only 3.8 per cent of handsets sold in India were smart phones. By 2011, this had increased to 8.1 per cent and is further expected to grow to 25 per cent by 2016," the report said.