Leading telecom operator Bharti Airtel has broken a 10-year jinx of sorts to touch the magic Arpu figure of Rs. 200 a month. Arpu is a critical metric for a telco, capturing the monthly average revenue per user. Against Bharti Airtel’s April-June FY24 montly Arpu at Rs. 200, Reliance Jio — with highest subscribers — was at Rs. 180.5. Vodafone Idea was at a distant Rs. 135, as per its latest fourth quarter FY23 numbers.
After the first quarter results of Bharti Airtel on Thursday, company insiders confirmed that the telco’s had last touched the Rs. 200 mark in ARPU during the first quarter of FY14, exactly 10 years ago.
In a recent interview to Business Standard, Bharti Enterprises Chairperson Sunil Bharti Mittal had said that reaching an Arpu of Rs. 200 would be the initial step towards the essential goal of Rs. 300.
“If you’re going to have only a handful of telecom players upon whom the entire Digital India dream rests, it’s crucial they’re financially sustainable. Hence, I have argued for years that we need a Rs. 300 Arpu. It has taken us much longer to reach this level than I anticipated, so it has been a painful journey,” Mittal had said in June. Amid a disruptive enviornment in the last many years, telcos have hardly raised tariffs until recently by Bharti Airtel, that too in a cautious way. Indeed, the telecom market in India features the world’s lowest average tariffs alongside high capital expenditure costs.
According to the latest data available with the Telecom Regulatory Auhtority of India (Trai), the industry-wide monthly Arpu was just Rs. 141.14 in the third quarter of FY23.
The low Arpu has been an industry talking point all across. Last year, Bharti Airtel CEO Gopal Vittal had projected that the targeted Arpu of Rs. 300 would be attained within the next five years. However, he emphasised that the company was planning another set of tariff hikes to propel the Arpu beyond the Rs. 200 mark.
How Arpu increased
Being the first to raise entry-level tariffs helped Bharti Airtel accelerate its Arpu growth, a move to which competitors are yet to respond.
In January, Airtel began phasing out its minimum recharge plan of Rs 99, which accounted for 7-8 per cent of its overall mobile revenue. By mid-March, this plan was discontinued in all 22 circles, replaced by a Rs 155 entry-level plan.
The new minimum recharge plan, offering unlimited calling, was a long-planned move. It was introduced given that most user categories now expect unlimited calling, analysts said.
Another strategic focus was to get more 4G customers from the existing user base. The company has long been trying to persuade legacy users, who don’t typically purchase higher-priced packages, to transition to 4G, according to an industry watcher.
Airtel’s efforts appear to be paying off, with 4G customer additions in the latest quarter exceeding analysts’ expectations. On Thursday, Airtel announced it had gained 5.6 million 4G data customers in Q1 FY24, who now constitute 68 per cent of the total mobile customer base. The 4G data customer count rose by as much as 24 million year-on-year.
“We have been focusing on acquiring quality customers and promoting premiumisation. This has enabled us to add 5.6 million new 4G customers and achieve the highest-ever postpaid customers in a single quarter. We concluded the quarter with an industry-leading ARPU of Rs 200,” Vittal stated.
Mobile data consumption increased by 21.6 per cent year-on-year, with consumption per customer rising to 21.1 GB per month.
