Sporadic wrong dials are now getting familiar after you buy a new SIM card. This has been happening for almost a year and no one gave it a thought. Is your number lucky? If that’s the case, your number will not be in the prune list. Every action by companies are in tandem with business decisions which boost revenue or to project a no problem scenario if they are in one.
Every industry has a parameter that is for the industry alone that matters in comparing similar businesses and telecom industry has one too. Apart from being financially strong, having quality assets, fair liquidity and well structured management, the industry particular parameter Average Revenue Per User is the end metric which an analyst look to compare telecom firms. This parameter says it all about the ideal ratios and scales. Average Revenue Per user (ARPU), is the currency profit per user. This is a simple ratio where the net income is divided by the consumer base.
A large base is still considered positive, when they all are contributing more. This wasn’t the case 4 years ago when jio came with full rage affecting the market average price. Jio then had a handful of customers, Airtel was against the minions, Vodaphone, Idea (before merger), Tata Docomo (was merged with Airtel in 2017), Aircel (obsolete since 2018). Telecommunication was nearing to a monopoly market, and some night Ambani was in a bad mood to bash Sunil Mittal and Jio came with new amendments to compete with Airtel. Until then Airtel was enjoying the throne, unfortunately, it never lasted longer. As a matter of fact
Pulling out unused IDs reduced the customer base who contributed not even nickels, and provided to new customers who are in need of a new Airtel SIM. They are more likely to live with it because data have become cheap and the passive validity which was earlier provided is now reduced to a week. People can stay away from telephone bills only for a week, Airtel never lets you sleep from the day 1, making sure that people have reached the recharge station. This way they (Telecom firms) want us to stay fully charged even though the user may not need some add ons.
Say, you have a featured phone which can access no bit of internet. The talktime recharge of this kind is costlier than opting for a (3 month data + Talktime) pack. This is in-product strategical pricing and no firm should be blamed because TRAI and DoT allow them to do so. Telecommunication firms are indolent in the few expedite implementation ensuing reduced customer experience.
Another manifestation is for users a month has 30 or 31 days, but the service provider lives in february number of days all month. That reduces 2 days in the one week time of next recharge, now you are left with only 4 days. This way the company stays idle only for 4 days per user, increasing the revenue and thus net income. Earlier service providers incentivise recharge stations for people to recharge at their physical store and now both JIO and Airtel has their own app to pay bills thus cutting the intermediary expense.
All these measures would increase existing users to be bustling than ever before to keep ARPU high. The industry has become dogmatic in tariffs and restricted offer packages due to huge firm competition and is now working on low cost service by soliciting Low Earth Orbit (LEO) satellites that ensures high speed connectivity and lives as a testimony of cheap service.
ARPU of Airtel has been recently (Q1 2022) at ₹145 from ₹166 in Q3 FY21, still being the top performer. JIO the telecommunication arm of Reliance Industries reported ₹138 per subscriber per month. The run or die firm VodaphoneIdea (VI) reported a ARPU rise to ₹121 in Q3 FY21. These numbers cannot be independently looked to build business perspectives, Airtel has global exposure in providing services, but VI is a country player. JIO is not as frenetic as Airtel in global footprints.
One hand, the competition reduced unjustifiable pricing to a fair price with restricted services. The Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecom has eliminated small players from the game, paving space to exploit the left out customers. In the run of acquiring new users, the companies overlooked to tap quality earnings from the existing users to improve revenue and that has now been at work for a short-long time.
This way the telecom metric is getting improvised to stay afloat in a highly competitive business environment.