Telcos' average revenue per user down by 24% in 2008-11: Study

The average revenue per user of mobile operators have declined by up to 24 percent 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 percent between 2008 and 2011, while for CDMA operators ARPU fell at a CAGR of 13 percent 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 percent of subscriber market share and the top three operators cumulatively have less than 50 percent market share, said the report. In contrast, other emerging markets have at least 80 percent 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 percent by 2015 from 14 percent in 2011, of which about 15-20 percent will come from mobile data, which is expected to grow at 126 percent.

The voice revenues will decrease to 73 percent from 86 percent during the same period.

"Proliferation of smart devices is accelerating this shift towards data. In 2008, only 3.8 percent of handsets sold in India were smart phones. By 2011, this had increased to 8.1 percent and is further expected to grow to 25 percent by 2016," the report said.