Project Report Dinesh Giri

8/4/2019 Project Report Dinesh Giri

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PROJECT REPORT

ON

ANALYSIS OF ARPU OF VODAFONE ESSAR AND RELIANCE

COMMUNICATIONS FOR UNITECH WIRELESS PVT. LTD

SUBMITTED IN PARTIAL FULFILLMENT OF

MBA

SUBMITTED BY:-

DINESH TUKARAM GIRI

SPECIALIZATIONFINANCE

ROLL NO- 57

BATCH- 2009-2011

INDIRA INSTITUTE OF MANAGEMENT PUNE

WAKAD, PUNE

SUBMITTED TO:-

ZONAL OFFICE, UNINOR

MAGARPATTA CITY

HADAPSAR, PUNE


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PREFACE

Summer training is an integral part of our academic curriculum, during the training a student gets

an opportunity to set the partial aspect of theory and raining makes the concept clear. This

project report is the outcome of summer training that I have undergone at Uninor Telecom,

PUNE for the partial fulfilment of Master of business administration.

I got an opportunity to apply my theoretical knowledge and meaning full concept to actual

business condition and to familiarize with actual activities of the product. All the work done on

this project is confide to my broad objectives i.e. ANALYSIS OF ARPU OF VODAFONE

ESSAR AND RELIANCE COMMUNICATIONS FOR UNITECH WIRELESS PVT.

LTD


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ACKNOWLEDGEMENT

I would like to acknowledge and extend my gratitude to the following persons who have

made the completion of this project possible: First of all I would like to thank our Project

Coordinator Prof. Mrs Purvi Shah for his great help. As he is being my Project Coordinator heprovided me very necessary and important guidance and support until the submission of my

project.

Secondly, I would like to thankMr. Chetan Wakalkar, Chairman of INDIRA Group of

Institute, and Mr. Pandit Mali Director of IIMP , to provide us such a very exciting

opportunity and for their good help to provide a better coordination and control among all the

activities related to completion of the project.

The entire project report owes its credit for the chlorite guidance and encouragement

rendered by our mentor AKSHAY JODHA whose perception and sagacity not only opened for

us. I record my sincere thanks to him with deep gratitude. I would like to thanks ASM KETAN

SHETTY for giving me an opportunity to do this project, and for their valuable guidance in

successful completion of project.

Lastly, I would like to be very thankful to the whole Family of IIMP for their continuous

effort in making the whole Project Activity very much learning and interesting.


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INDEX

Sr.

No.

Chapter Name Page No

1 Executive Summary 52 Rationale of Study 73 Industry Profile 84 Company profile 275 Literature Survey 346 Objectives and Scope

397 Research Methodology 408 Data Analysis and Interpretation 479 Observations and Findings 66

10 Recommendations 6811 Conclusion 72

12 References 73


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Executive Summary:

Introduction:

The Indian telecommunications industry is one of the fastest growing in the world.

Industry has reached subscriber base of 638 million in April 2010 with tele-density of 55.38.

Considering big opportunity in Indian telecom sector, Norway based Telenor group in joint

venture Unitech ltd has launched its service under the brand name Uninor in 11 circles.

ARPU levels in emerging markets likes India have been dramatically decreasing because

of increasing competition, price reductions, and a second wave of customer acquisition from

predominantly lower income segments. The next wave of customers will primarily be low

income. The mix of mobile subscribers in India was 71% urban versus 29% rural, according to

the Telecom Regulatory Authority of India (TRAI). This is exactly opposite to the countrys

demographic composition, with 30% of Indians in cities and 70% in rural areas. To reconcile this

disparity, telecom operators in India are forced to seek subscriber growth in low-income, rural

areas.

So with 15 telecom operators competing for market share it has become challenge for

telecom operators to earn substantial revenue and profit for share holders. This report aims at

analyzing ARPU, reasons for decing ARPU and to recommend Uninor possible ways to increase

ARPU.

Research Methodology:

Research is a scientific and systematic search for partisans information on specific topic.

The type of research carried out in this project is analytical type of research. Facts and

information was made available and analysis had to be undertaken to make a critical evaluation

of the company. Secondary data has been used in this research.

The information is collected from

Company websites, annual reports, Analyst meet.

Other websites and research reports.


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Objectives:

To Understand ARPU and its significance in the perspective of telecom Industry.

In-depth analysis of circle wise APRU of telecom companies Vodafone Essar and

Reliance communications.

To determine reasons behind the decline of ARPUs of telecom companies.

To find out ways to improve ARPU.

Data Analysis and Interpretations:

After analyzing circle wise ARPU data of Vodafone, Reliance and all India on aggregate

basis following things are found

Continues decline in ARPU and has reached to Rs150 by Mar 2010 from 357 in Mar08

Subscriber base is increasing steadily with very less fluctuating growth rate. Where as

though in all revenue has also increased but its growth rate was always below the growth

rate of subscribers which ultimately result into low ARPU.

As companies are focusing more on low income consumer and due to increased price war

ARPU is bound to decline. So companies need shift their focus to AMPU i.e. Average

Margin per Use, which will guarantee profit instead of low ARPU.

So for uninor to earn substantial profit and revenue some recommendations are:

o Focusing on AMPU

o Price bundling

o Network sharing

o Value added services

o Reducing Cost

o Constant innovation and Quality of service.


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Rationale of Study:

Indias economic growth has accelerated significant over the past two decades and so too,

has the spending power of its citizens. Real average household disposable income has roughly,

doubled since 1985 with rising incomes, household consumption has soared and a new Indianmiddle class has emerged.

The Indian telecommunications industry is one of the fastest growing in the world.

According to the Telecom Regulatory Authority of India (TRAI), the number of telephone

subscriber base in the country reached 653.92 million as on May 31, 2010, an increase of 2.49

per cent from 638.05 million in April 2010. With this the overall tele-density (telephones per 100

people) has touched 55.38.

Unitech Wireless is a joint venture company of Indias second largest diversified real

estate major Unitech Ltd. and the Norway based worlds 6th largest mobile services provider

Telenor Group with Telenor holding 67.25 per cent hold of the company. Unitech wireless which

already holds license for 22 telecom circle has started their service in 13 circles under the brand

name Uninor.

With increased price war and 15 operators competing to capture more and more market

share, ARPU of Indian telecom operator is been continuously declining and has reached Rs 131

for GSM users by Mar 2010 from Rs 144 in Mar 2009 and Rs 394 in Mar 2005. This continues

decline in ARPU has result in decreasing profit margins and has put challenge in front of telecom

service to sustain, to provide quality service and to earn profit for share holders.

With its rollout in 11 circles like all other service providers falling ARPU is also

challenge for uninor and hence company believes that now earning profits and generating

substantial amount of revenue is more important than only increasing market share in terms of no

of subscribers. Company has launched in Maharashtra and Goa circle with innovative pricing

strategy i.e. Badlata Discount company has been able to gain substantial market share.

This report is sincere effort to understand ARPU and its significance. It focuses on

analyses of circle wise ARPU for two competitors (of Uninor) Vodafone Essar, Reliance

Communications and also all India on aggregate basis. The report aims at determining reasons

behind the decline of ARPU and to find out ways to increase ARPU. Based on analysis Report

highlight the steps that Uninor can take to increase ARPU.


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Industry Profile in brief:

Telecom Industry:

Telecommunications industry deals with the activities and services of electronic

systems for transmitting messages through cables, telephone, radio or television.

Components and factors responsible behind the growth of telecommunications industry

Two major factors responsible for the growth of telecommunications industry are use of modern

technology and market competition. One of the products of modern technologies is optical fibers,

which are being used as a medium of data transmission instead of using coaxial or twisted pair

cables. Optical fibers can carry a high volume of data and are easier to maintain and install. Use

of communication satellites makes this telecommunications industry a booming industry.

The use of mobile network has a crucial role behind the growth of an improved

telecommunications industry. Leading companies are showing their interest to invest in this

telecommunications industry.

Telecommunications industry is going to be a digitized one. Use of ISDN (Inter Services Digital

Network) makes this telecommunication industry a total digitalized system and eventually

enhanced the speed and quality of digital communication.

The introduction of these advanced technologies makes the telecommunications industry a

competitive one, where a number of multinational companies have shown their interest to invest

in this industry and consequently the prices are reduced, the quality is also improved. During the

period of 1990, the telecommunication industry showed a speedy growth in terms of investment

and eventually increased the competition. The competition between the companies led to the

decline of revenues.
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Global Telecom Industry:

World telecom industry is an uprising industry, proceeding towards a goal of achieving two

third of the world's telecom connections. Over the past few years information and

communications technology has changed in a dramatic manner and as a result of that worldtelecom industry is going to be a booming industry. Substantial economic growth and mounting

population enable the rapid growth of this industry.

Market potentiality of world telecommunication industry

The world telecommunications market is expected to rise at an 11 percent compound annual

growth rate at the end of year 2010. The leading telecom companies like AT&T, Vodafone,

Verizon, SBC Communications, Bell South, Qwest Communications are trying to take the

advantage of this growth. These companies are working on telecommunication fields like

broadband technologies, EDGE(Enhanced Data rates for Global Evolution) technologies, LAN-

WAN inter networking, optical networking, VOIP, wireless data service etc.

Economical aspect of telecommunication industry

World telecom industry is a crucial part of world economy. The total revenue earned from this

industry is 3 percent of the gross world products & is aiming at attaining more revenues. One

statistical report reveals that approximately 16.9% of the world population has access to the

Internet.

Telecom industry trends

Traditional telecom technologies are now being replaced by modern wireless technologies,

specifically in case of mobile services. One of the major objectives of telecom industry is to

enhance the quality and speed of Internet technology.

These days, telecom industry is more concerned with texts and images (Internet technologies),

rather than voice(telephone service). Most of the research works are going on Internet

accessibility, specifically on data applications and broadband services. The other major division

of telecom industry is mobile network sector, where lots of innovative research works are going

on. Previously the traditional telephone calls used to earn the maximum revenues, but these days

mobile service is going to replace traditional telephone services.
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INDIAN Telecom Industry:

Historically, the telecom network in India was owned and managed by the Government

considering it to be a natural monopoly and strategic service, best under state's control. However,

in 1990's, examples of telecom revolution in many other countries, which resulted in betterquality of service and lower tariffs, led Indian policy makers to initiate a change process finally

resulting in opening up of telecom services sector for the private sector.


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Market overview

The telecom sector in India has witnessed unparalleled growth by global standards in the last

decade and continues to be one of Indias biggest success stories. This growth has been built

on the wireless revolution.

At the end of March 2010, the overall tele-density was recorded at 52.74% with a total

telephone subscriber base of 621.28 million registering the growth rate of 10.5%.

By 2012, the total telecom subscriber base is expected to reach approximately 700 million to

include about 650 million wireless users and approximately 50 million fixed line users,

driven by a rise in the demand for communications from semi-urban and rural India.

Revenues of the Indian telecom industry are projected to reach US$ 45 billion by 2012 ascompared to US$ 26 billion in 2008.

Rural subscription continued to show increase in rate of growth. It increased from 14.96% in

Dec-09 to 15.06% in Mar-10. Urban subscription grew at the rate of 8.47% as against 8.51%

in the previous quarter. This in other words, implies rapid increase in rural subscriptions

during the quarter.


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The key players in the Indian telecom market are Bharat Sanchar Nigam Ltd (BSNL) and

Mahanagar Telephone Nigam Limited (MTNL), Bharti Airtel Limited, Reliance

Communication, Vodafone, Idea Cellular, Aircel and Tata Teleservices.

Sources:Telecom Regulatory Authority of India (TRAI) Subscription DataJune 2010

India 2012: Telecom growth continues, Ernst & YoungTelecom Report, 2008


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Snapshot:

(Data As on 31st March 2010)

Telecom Subscribers (Wireless +Wireline)

Total Subscribers 621.28 Million

% change over the previous quarter 10.5%

Urban Subscribers 420.47 Million (67.7%)

Rural Subscribers 200.81 Million (32.3%)

Teledensity 52.74

Urban Teledensity 119.73

Rural Teledensity 24.29

Wireless Subscribers

Total Wireless Subscribers 584.32 Million

% change over the previous quarter 11.28%



GSM Subscribers 478.68 Million (81.9%)

CDMA Subscribers 105.64 Million (18.1%)

Teledensity 49.60



Wireline Subscribers

Total Wireline Subscribers 36.96 Million

% change over the previous quarter -0.29%



Teledensity 3.14




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Market Segment:

The Indian telecom industry can be primarily divided into basic, cellular and internet services. It

also has smaller segments such as radio paging services, Very Small Aperture Terminals

(VSATs), Public Mobile Radio Trunked Services (PMRTS) and Global Mobile Personal

Communications by Satellite (GMPCS).


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Major Players wireless service:

List of Cellular Mobile (GSM & CDMA) Service Providers currently providing service [As on

31st March 2010]

SLNo. Service Provider Area of Operation

1 Bharti All India

2 Aircel Group AP, TN, Karnataka, Assam, Bihar, Chennai,

Delhi, HP, J&K, Kerala, Kolkata, MH,

Mumbai, NE, Orissa, UP(E), UP(W) & WB

3 Reliance Communications All India (except Assam & NE)

4 Reliance Telecom Kolkata, MP, WB, HP, Bihar, OR, Assam & NE

5 Vodafone All India

6 Tata Teleservices All India

7 IDEA (Including All India

Spice)

8 Sistema Shyam Kolkata, TN (incl. Chennai), Karnataka,

Telelink Kerala, Rajasthan, Haryana, Maharashtra,

Mumbai, Delhi, Bihar & WB

9 BSNL All India (except Delhi & Mumbai)

10 MTNL Delhi & Mumbai

11 Loop Telecom Private Ltd Mumbai

12 HFCL Punjab

13 UnitechAP, Karnataka, TN (incl. Chennai), Kerala, UP(W), UP(E), Bihar& Orissa

14 S Tel HP, Bihar & Orissa

15 Videocon Haryana & TN (incl Chennai)

16 EtisalatAP, Delhi, Gujarat, Karnataka, Kerala, Maharashtra, Punjab,Rajasthan & UP(E)


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Market segments wireline

The subscriber base of wireline services stood at 36.76 million as on January 2010 with a

tele-density of 3.13.

Public sector undertakingsBSNL and MTNLhave a major share of the wireline market

covering about 85 per cent.

MTNL is present in Delhi and Mumbai, while BSNL covers the rest of the country.

Though private players such as Tata Teleservices, Bharti Airtel and Reliance have registered

significant growth, BSNL still dominates the segment in terms of wireline subscriber base.


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Market segments wireless

The wireless segment includes GSM and CDMA services and is much larger than the

wireline segment in India. The segment is growing steadily because of the convenience and

utility that it offers.

The subscriber base of wireless services stood at 545.05 million as of November 2009 with a

tele-density of 46.37 percent.

During 200809, the cellular market recorded 328.83 million GSM subscribers accounting

for 77 per cent of the market and 98.46 million CDMA subscribers accounting for the

remaining 23 per cent.

A major share of the wireless market is being held by private players such as Bharti AirtelLimited, Reliance Communication, Vodafone, Idea Cellular, Aircel and Tata Indicom.


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Key Trends:

The wireless segment in India is much larger than the wireline segment and is growing

steadily due to the convenience and utility that it offers.

Wireless services hold a major market share of 93.4 per cent as compared to the wireline

segment.

The subscriber base of wireline segment is decreasing given its limited usage.

Rural markets will be the next key growth driver for the Indian telecom sector given the

growing population and disposable income of rural India.

The subscriber base in the rural market has improved significantly in 200809 with tele-

density recorded at16.61per cent as of June 2009.

By 2012, the rural subscriber base is expected to account for nearly half of the total

subscriber base fuelling sector growth.


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Bharti Airtel has the largest market share in the GSM segment. During 200809, out of

the total subscriber base of 328.83 million, private players accounted for approximately

84 per cent, while the public sector operators (BSNL and MTNL) accounted for the

remaining share (16 per cent).


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Reliance Communications dominates the Indian CDMA mobile services segment with a

subscriber base of 54.19 million.

The share of the private sector in total telephone connections has grown to 82.3 per cent

in December 2009 as against 5 per cent in 1999.

From only 54.6 million telephone subscribers in 2003, the number increased to 562

million as on October 31, 2009. This growth has been entirely due to the wireless

connections growing at a CAGR of 60 per cent per annum since 2004.

Operators are reducing operating costs and hiving off infrastructure elements such as

towers into separate entities, thus inviting significant investments.

Passive infrastructure sharing has benefitted the Indian mobile industry and its customers,

reducing the cost burden of each operator and speeding the rollout of mobile services.

In recent years, initiatives such as network cost optimisation, outsourcing of non-core

activities, as well as low-cost business models have been in focus.

Every telecom service provider is looking beyond the basic voice services by offering a

composite bouquet of bundled offerings. For example, nearly all the leading operators,

including incumbents, are in the testing phase to launch commercial IPTV services.

Indian operators are at a nascent stage in terms of offering quad-play using the existing

network infrastructure for data, voice, video and basic communication services.


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Consumers can get all these services from the same telecom operator and enterprises can

also access virtual private networks (VPN), video-conferencing, enterprise solutions,

mobility and fixed telephony from the same integrated telecom service provider.

Investments:

Despite the global economic slowdown in 200809, the telecom sector is one of the

highest FDI attracting sectors in India. At present 74 to100 per cent FDI is permitted for

various telecom services.

The telecom market is witnessing several M&A activities. This trend has helped

companies expand their presence in the Indian telecom market to offer better services to

customers.


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Policy and regulatory framework:

The Department of Telecommunications (DoT) governs the Indian telecom industry. The

DoT, in coordination with the Telecom Commission, looks after licensing, policy

formulation, frequency management, administrative monitoring, research and development,equipment standardisation and validation along with private investments.

The Telecom Regulatory Authority of India (TRAI) was established in1997 by the DoT to

streamline policy reforms and safeguard consumer interests.

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) was also established in

the same year.


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Unified Access Licensing Regime (UALR)

The establishment of the UALR (2003) eliminated the need for separate licencesfor

different services. This regime allowed players to offer both mobile and fixed-line services under

a single licence after paying an additional entry fee. The regime does not take into account thenational and international long distance services and Internet access services.

Between February and March 2008, the DoT granted 120 new licences to provide unified

access services to various companies, including Datacom Solutions Pvt Ltd, Aska Projects Ltd,

Swan Telecom Pvt Ltd, Loop Telecom Pvt Ltd and S Tel Ltd.

Universal Service Obligations (USO)

The USO policy was implemented along with the National Telephone Policy (NTP)

in1999 to widen the reach of telephony services in rural India. All telecom operators are bound

to contribute 5 per cent of their revenues to this fund. This system was put in place to bridge the

gap between urban and rural tele-density, which is currently at 31 per cent. Initially, only basic

service providers were under the purview of USO. Later, its scope was expanded to include

mobile services also. Although it increases the cost burden for telecom companies, USO helps in

building the telecommunication infrastructure in rural areas.


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Financial Data Of The Telecom Companies.

Gross Revenue (GR), Adjusted Gross Revenue (AGR), License Fee (LF) & Spectrum

Charges

Gross Revenue has increased by 1.28% and AGR declined by 1.02% compared with

previous quarter.

Average License fee as % Gross Revenue: 5.98%.

Average License fee as % Adjusted Gross Revenue: 8.35 %.

Pass-through charges as % Gross Revenue: 28.40%.

Public sector undertakings share to Total GR: 19.68%.


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Service-wise Gross Revenue, Adjusted Gross Revenue (AGR), Licence Fee and

Spectrum Charges (Rs. in Crore)

Access services contributed 77.37% of the total revenue of telecom services.

Access Services Service Provider wise Gross Revenue (Rs in Cr.)

In Access services, GR has increased from Rs. 31099.52 crore in QE Dec-09 to Rs.

31153.69 crore in QE Mar-10, thereby showing a growth of 0.17%.


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Category-wise share in Access Revenue (GR)


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Company profile:

Introduction:

Uninor is a new mobile operator, with a localized approach to the Indian market. Its combine

the force of Indias second largest real estate company, Unitech Ltd and Norway-based Telenor,

the 6th largest mobile communications group in the world. Now they are bringing our services

and innovation in communications to all of India.

Holds a pan-India UAS license to offer mobile telephony services in each of Indias 22

circles.

Has also received spectrum to roll out these services in 21 of the 22 circles.

Agreement to raise Telenor ownership to 67.25%

The Telenor Group has proven itself to millions of customers around the world over a long

period of time. With over 150 years of telecom experience, the group is now present in 13

countries worldwide with over 168 million mobile subscriptions as of Q2 2009 and 40,000

employees across the globe. A dominant position in markets most similar to India means the

group brings existing competencies in distribution, targeted offerings, and customer lifecycle

management and organization culture to its operations in India.

As Indias second largest diversified real estate major with over 30 years of presence

across locations nationwide, the Unitech Group comes into this joint venture as a partner with

decades of consumer facing experience in the Indian market. Unitech is the only Indian partner

(among the new operators) to be listed on the Indian Stock Exchanges, and provides in-depth

insights into business- as well as consumer marketing in the diverse Indian market. This unique

partnership gives us the advantage of the most extensive and the most relevant experience to

rollout services in India.

Uninor in society believes that the demand for mobile services in India will continue to

grow rapidly as a result of the following factors:

Lower tariffs and handset prices over time;

Growth in pre-paid customer category;


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Greater economic growth and continued development of India's economy;

Higher quality mobile networks and services; and

Greater variety and usage of value added services.

At Uninor believe in safeguarding human worth. A non-discriminatory and respectful attitude

towards customers, colleagues and wider society will be the hallmark of our approach. And its

will work to be at the forefront in matters of health, safety, security and the environment. Its

primary responsibility is to help people communicate wherever they are. it will leverage on it

combination of local heritage and global telecom experience to develop products and services

that positively affect peoples lives. Driven by its values, it will work to:

Maximize the enabling effect of mobile telecommunications

Promote safer products and services

Make responsible business practices part of everything we do.

Vision

Our vision is simple, yet powerful. We exist to help you get the full benefit of communications

services in your daily lives. Were here to help.

This means providing services that bring solutions to your everyday endeavors and needs,

enabling your future aspirations to come even closer.

We are driven by this promise to you.

- A promise to keep things simple. A promise to listen and respond. A promise to constantly

innovate, motivate and support; so you see change.


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Telenor

Core services of Telenor what we do

These are the main services we provide to consumers and enterprises around the world:

Voice: Talk on the phone. From fixed-line to mobile or IP telephony, Telenor enables

people to talk to each other using fast and reliable networks throughout the world. We

provide fixed voice communication services in three Nordic countries and mobile voice

in 13 countries across Europe and Asia.

Data: Internet and broadband. We offer fixed-line data services (e.g. ADSL and fibre-

optic communications) in the Nordic countries, and mobile data services (e.g. mobile

broadband, GPRS, UMTS) in 13 countries. As of 2008, 3G-based mobile broadband

services have been launched in 7 of our operations.

Content: TV services and mobile content. Telenor offers TV services via cable, digital

terrestrial and satellite networks in four Nordic markets. In several markets we also offer

mobile content services (e.g. ring tones, music, movies, sports, and mobile TV).

Other services: We offer a wide range of telecom-related services, and the service

portfolio varies from country to country. In several markets we provide Net-centric

services like IT security to consumers and enterprises and machine-to-machine (M2M)

services for enterprises. We also provide IT consulting, maritime communications and

aircraft communications services.

Glogal market share of telenor

The major part of our business is organised in three regions:

Asia: Bangladesh, Malaysia, Pakistan, Thailand and India.

Nordic countries: Denmark, Norway, Sweden and Finland.

Central and Eastern Europe: Hungary, Montenegro, Russia, Serbia and Ukraine.

For market information and country-specific data, please refer to our global presence section.
http://www.telenor.com/en/global-presence/http://www.telenor.com/en/global-presence/http://www.telenor.com/en/global-presence/http://www.telenor.com/en/global-presence/


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The Telenor Group Strategy

Telenor Group's ambition is to be a leading global mobile operator, while delivering attractive

returns to our shareholders.

To deliver on our ambitions, the Telenor Groups main focus areas in 2010-2012 are to:

1.Capture growth in our three regions

2. Strengthen operational performance and leverage Group scale and competence

3. Ensure capital discipline

Through the Going Dynamic process, we link strategy to quarterly performance monitoring and

forecasting. In addition, a combined financial and non-financial scorecard has been established at

Group level. For all operating companies in the Group, the main ambition is to maintain or

improve revenue market share while improving cash flow margins. This will yield an increase in

Group cash flow over the period.

Telenor Group should maintain or improve our position in the following non-financial areas:

Customer satisfaction

Brand preference

Human resources: Strength of our leadership pipeline

HSSE: Total Recordable Injury Frequency

Climate change: Carbon intensity of our operations.

The Telenor International Culture PrizeBoundless communication

For Telenor art is an integral part of the work environment. We create our own cultural concepts

and encounters. Since 1995 Telenor has awarded a prize for outstanding performances in music,

film, literature, visual or performing arts, etc. In recent years the focus of the Culture Prize has

shifted from national to international contributions to culture. The prize is worth NOK 250,000

(50,000 USD)


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History

The company Unitech Wireless was until 2009 a subsidiary of Unitech Group, holding a

wireless services licence for all 22 Indian telecom circles since 2008. In early 2009, Unitech

Group and Telenor agreed on a majority take-over by Telenor of Unitech's wireless business,including Unitech Wireless' national-wide mobile licence. By March, May and November,

Telenor acquired a 33%, 49% and 60% stake in Unitech Wireless, respectively. In September,

the mobile operation changed its name to Uninor. On October 19 the Indian Cabinet Committee

of Economic Affairs (CCEA) announced that it has approved Telenor's acquisition of up to 74%

in Unitech Wireless, and the shareholder's agreement sets a 67.25% Telenor ownership in

Uninor.

Uninor's strategy == Uninor is India's eighth nation-wide mobile operator, in a competitive

landscape of13 nation-wide or regional mobile operators. The company is targeting an 8 % pan-

Indian market share, and the opening of one million retail points and breaking even on EBITDA

within three years.It will provide mobile communication and Value Added Servic.

In order to reduce time-to-market, Uninor will outsource infrastructure and back-end services to

partner organizations with established core competencies. The operational model is low-cost with

a gradual network-build up, infrastructure sharing, GSM equipment at competitive cost, full-

scale IT-outsourcing and a long term cost and capex efficiency.

Uninor will organise with headquarters just outside Delhi (Gurgaon), and 11 regional hubs

covering one or more of the total of 22 telecom circles.

Hub head offices are located in the following cities:

Kochi- Kerala Circle

Chennai - Chennai, Tamil Nadu

Bangalore - Karnataka Circle

Hyderabad- Andhra Pradesh Circle

Kolkata - Kolkata, West Bengal & Orissa Circle

Delhi / Noida (NCR) - Delhi, Western Uttar Pradesh, Uttarakhand & Rajasthan Circle


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Patna - Bihar & Jharkhand Circle

Mumbai - Mumbai, Maharashtra & Gujarat Circle

Lucknow

Guwahati

Chandigarh

Indore

Ahmedabad

To quickly launch mobile services only nine months after the foundation of the new

company, Uninor has entered into network and base station service agreements with partners.

Tower sharing agreements are concluded with Wireless-TT Info Service Limited and Quippo

Teleco Infrastructure Limited Telecommunications, network and radio equipment is to be

supplied by Alcatel-Lucent, Huawei Technologies India, Nokia Siemens Networks and Ericsson.

The company's IT services and infrastructure is to be shared with Wipro Technologies.


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Literature Survey:

ARPU stands for "average revenue per user per month (Rs/User/Month)," which refers to the

average telecom revenue receiving from each subscriber per month.

In the telecom industry, there are numerous instances when one comes across the term ARPU

stands for "average revenue per user per month (Rs/User/Month)," which refers to the average

telecom revenue receiving from each subscriber per month.. In common parlance, it is simply

total revenue divided by the total subscribers for a particular time period.

Importance to the telecom industry:

ARPU plays a key role in an industry like telecom in particular and any service industry

that has a mass base. Average is the measure of central tendency of data and can only be taken

when standard deviation is low. Thus, in most cases, wherein the service has too many users, the

standard deviation usually reduces and ARPU becomes an effective tool. It helps not only in

understanding how the industry as a whole is faring but also assists in benchmarking a particular

player against others or industry average.

However, despite being a simple ratio, it is the most misused term the definition of which

changes with changing context. In common parlance, it is calculated by dividing the total

revenue by the total subscriber over a particular time period. It is while calculating these threeterms, revenue, subscribers and time period, that one comes across many anomalies.

Anomalies associated with time period: Whenever ARPU is mentioned, one should also

mention whether it is the ARPU figure per month, quarter, half year or a year. Time frame

should be clearly mentioned. In most cases, we make intuitive guess to figure out if the given

ARPU is per month, quarter, or year.

Types of ARPUs Based on revenue calculations:

Across the globe, telecom companies use different revenues to calculate ARPU. The revenue

could be net or gross. There might have rental income that is included in gross revenue but has

nothing to do with services revenue. According to common practice in the US, only that revenue,

the service equivalent of which has been consumed by the customer should be accounted for. In

many cases, organizations do not provide this clarity. They tend to quote a high or low numerator


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depending on what proves beneficial for them in any context. One could have ARPUs like gross

ARPU, net ARPU, gross services ARPU, net services ARPU, among others.

Broad ARPU:

Broad or consolidated ARPU is arrived at by calculating the gross or total revenue and

dividing it by total number of subscribers/users for any given period. This should ideally be

termed as average gross revenue per user.

Net ARPU:

The need to calculate net ARPU can be attributed to the fact that not all the revenue that

any telecom operator (cellular or fixed) collects is retained by the operator. Consider a cellular

operator for example. When its customers go to a circle where the same operator does not

provide its services, then some portion of the total bill goes to another operator.

Similar costs borne by the cellular operator that include revenue share with the government (as

license fee), interconnect charges, roaming charges to other service providers, national and

international long distance charges to long distance carriers and service taxes.

Again, if one is considering the pre-paid segment, then there are channel margins to be paid.

Thus if one was to subtract all the above costs from gross revenue to get the net revenue and then

divide by the total subscriber base for a given period, one arrives at net ARPU, which gives a

clearer picture.

Blended ARPU: Based on the classifications mentioned till now, whatever ARPU one talks

about and mentions, the overall ARPU might not be of great use. The pre-paid and post-paid

customers show drastically different tendencies.

Pre paid subscribers are generally low-end subscribers and post-paid subscribers are the high-end

users. When one calculates ARPU without differentiating between the pre-paid and the post-paid

subscribers then the ARPU figure one arrives at is called the blended ARPU. Thus based on the

different classifications discussed above, we can arrive at blended gross ARPU, blended net

ARPU, gross ARPU of pre-paid, gross ARPU of post-paid segment, net ARPU of pre-paid

segment, net ARPU of post-paid segment.


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Variations in total subscriber base calculation:

Subscriber numbers, which is the denominator of the said ratio, also plays key role. It is

critical to know what exactly does the number of subscribers being considered stand for.

First, is the number of users/subscribers being considered? Typically, number of users is the

number of active connections while the number of subscribers is always less than this for many

subscribers might have multiple connections.

When the organizations want to portray high ARPUs, they use number of subscribers at the

beginning of the period (though the revenue is calculated for the entire period in question).

In cases where less ARPU is beneficial (say, while lobbying with the government), they might

use the number of subscribers at the end of the month. In many cases, they also use the simple

average of number of subscribers at the beginning and the close of the month. Ideally, one should

take the number of active subscribers who have contributed to revenue in that period. This takes

care of excluding those subscribers who are in the grace period of pre-paid connection.

Significance:

ARPU is important because it provides a breakdown of what is driving revenue growth, and it

also gives some indications of what is driving margins. Growing by increasing revenues from

users tends to be better for margins than increasing revenues by increasing the user base, as the

latter incurs additional costs.

ARPU growth can also indicate how successful a company is being in moving users to new

services (e.g. pictures messaging, data connections etc.) that are regarded as strategically

important and an indicator of how margins will fare (newer services tend to be higher margin).

However, companies often disclose the composition of their revenues streams separately in any

case.

Average revenue per unit allows for the analysis of a company's revenue generation and growth

at the per-unit level, which can help investors to identify which products are high or low

revenue-generators.

The values of the measures obtained can be used as a comparison between companies.

Companies may also use this information to determine which product lines are lagging.
http://moneyterms.co.uk/margins/http://moneyterms.co.uk/margins/


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Average margin per user (AMPU):

AMPU is one of several criteria for measuring the success of telephone companies. It is an

alternative to ARPU, which focuses on revenue per unit or per customer, typically measured as

the revenue minus the costs and divided by the number of users. The central premise is that byattention to the margin produced per sold unit, not the amount of cash (revenue) earned from

each customer, one can afford low volumes and still have a healthy company. High volumes can

also bring a significant edge, but only until competition forces prices down. Telecom analysts are

traditionally highly focused on ARPU because the typical telco has had huge infrastructure costs

that needs to be serviced by a considerable ARPU.

Minutes of use (MoU):

MoU is a measurement usually in minutes time unit that show how long each user (in average)

consumes a product/service in a month. This measurement often used in telecommunication

industries or other industries which the product/service consumption is due to time unit (time

based pricing) such as: electric/power companies, gas companies, sterilized water companies,

etc. The value of MoU can be used as one of performance indicators in some businesses.
http://en.wikipedia.org/wiki/Telephone_companieshttp://en.wikipedia.org/wiki/ARPUhttp://en.wikipedia.org/wiki/Marginhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Marginhttp://en.wikipedia.org/wiki/ARPUhttp://en.wikipedia.org/wiki/Telephone_companies


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MoU vs. ARPU:

Both of MoU and ARPU are indicate the business performance that still could be related to the

revenue as its end result.

In the reverse mathematical operation we can see the differences of these two kinds

methods. We can see the differences from its formulated variables. Variables that effect to MoU

are totally time usage (for all customers) and number of customers. In other side, ARPUs

variable are : the number of customers and the totally revenue. Either ARPU or MoU is indicate

the using of each customer in a month or one periodic time. The only different is i ts the

measurement unit. ARPU measured in currency but MoU measured in time unit. They both have

the same variable, number of customers. To the increasing of revenue, they both still indicates

the same symptomp too. The increasing of ARPU indicates the increasing of revenue, and so

does the MoU.

The only question is : when do we use ARPU and when do we use MoU in our analysis ?

ARPU usually use for two or more products consumption combination, and usually the

measurement unit also variated too. For example a telecommunication operator that provides

voice call (pricing in US $ per minutes), data internet (pricing in US $ per Mbyte), and also

mailbox feature (pricing in US $ per month). We should use ARPU method for analysis. For

getting the ARPUs value, we have to calculate the average of invoice of all customers we have.

But if in case internet service provider which used flat rate time based charging method, we

could use MoU method for analysis in order to evaluate the business performance.

Actually, MoU and ARPU would be better used in complementary one another. In case above,

for heterogenic products we usually use ARPU for our analysis. But for further analysis, we

could also use MoU (for detailed specific product) such as MoU for International Call, MoU for

VOIP, and MoU for local call.

MoU also could be used for analysis which the objective is to know or evaluate the effect

of marketing program especially in pricing to the increasing of the usage of every customer (in

average).


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Objectives and Scope:

To Understand ARPU and its significance in the perspective of telecom Industry.

In-depth analysis of circle wise APRU of telecom companies Vodafone Essar and

Reliance communications.

To determine reasons behind the decline of ARPUs of telecom companies.

To find out ways to improve ARPU.


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Research Methodology

MEANING OF RESEARCH

Research in common parlance refers to a search for knowledge. Once can also

define research as a scientific and systematic search for pertinent information on a specific topic.

Research is an academic activity and as such the term should be used in a technical sense.

TYPES OF RESEARCH

The basic types of research are as follows:

(i) Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding

enquiriesof different kinds. The major purpose of descriptive research is description of

the state of affairs as it exists at present. In social science and business research we quite

often use

the term Ex post facto research for descriptive research studies. The main characteristic of this

method is that the researcher has no control over the variables; he can only report what has

happened or what is happening. Most ex post facto research projects are used for descriptive

studies in which the researcher seeks to measure such items as, for example, frequency of

shopping, preferences of people, or similar data. Ex post facto studies also include attempts by

researchers to discover causes even when they cannot control the variables. The methods of

research utilized in descriptive research are survey methods of all kinds, including comparative

and correlational methods. In analytical research, on the other hand, the researcher has to use

facts or information already available, and analyze these to make a critical evaluation of the

material.

(ii)Applied vs. Fundamental: Research can either be applied (or action) research or fundamental

(to basic or pure) research.Applied research aims at finding a solution for an immediate problem

facing a society or an industrial/business organisation, whereas fundamentalresearch is mainly

concerned with generalisations and with the formulation of a theory. Gathering knowledge for

knowledges sake is termed pure or basic research. 4 Research concerning some natural


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phenomenon or relating to pure mathematics are examples of fundamental research. Similarly,

research studies, concerning human behaviour carried on with a view to make generalisations

about human behaviour, are also examples of fundamental research, but research aimed at certain

conclusions (say, a solution) facing a concrete social or business problem is an example of

applied research. Research to identify social, economic or political trends that may affect a

particular institution or the copy research (research to find out whether certain communications

will be read and understood) or the marketing research or evaluation research are examples of

applied research. Thus, the central aim of applied research is to discover a solution for some

pressing practical problem, whereas basic research is directed towards finding information that

has a broad base of applications and thus, adds to the already existing organized body of

scientific knowledge.

Quantitative vs. Qualitative: Quantitative research is based on the measurement of quantityor

amount. It is applicable to phenomena that can be expressed in terms of quantity. Qualitative

research, on the other hand, is concerned with qualitative phenomenon, i.e., phenomena relating

to or involving quality or kind. For instance, when we are interested in investigating the reasons

for human behaviour (i.e., why people think or do certain things), we quite often talk of

Motivation Research, an important type of qualitative research. This type of research aims at

discovering the underlying motives and desires, using in depth interviews for the purpose. Other

techniques of such research are word association tests, sentence completion tests, story

completion tests and similar other projective techniques. Attitude or opinion research i.e.,

research designed to find out how people feel or what they think about a particular subject or

institution is also qualitative research. Qualitative research is specially important in the

behavioural sciences where the aim is to discover the underlying motives of human behaviour.

Through such research we can analyse the various factors which motivate people to behave in a

particular manner or which make people like or dislike a particular thing. It may be stated,

however, that to apply qualitative research in practice is relatively a difficult job and therefore,

while doing such research, one should seek guidance from experimental psychologists.

(iii)Conceptual vs. Empirical: Conceptual research is that related to some abstract idea(s) or

theory. It is generally used by philosophers and thinkers to develop new concepts or to

reinterpret existing ones. On the other hand, empirical research relies on experience or

observation alone, often without due regard for system and theory. It is data-based


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research, coming up with conclusions which are capable of being verified by observation

or experiment. We can also call it as experimental type of research. In such a research it

is necessary to get at facts firsthand, at their source, and actively to go about doing certain

things to stimulate the production of desired information. In such a research, the

researcher must first provide himself with a working hypothesis or guess as to the

probable results. He then works to get enough facts (data) to prove or disprove his

hypothesis. He then sets up experimental designs which he thinks will manipulate the

persons or the materials concerned so as to bring forth the desired information. Such

research is thus characterized by the experimenters control over the variables under

study and his deliberate manipulation of one of them to study its effects. Empirical

research is appropriate when proof is sought that certain variables affect other variables

in some way. Evidence gathered through experiments or empirical studies is today

considered to be the most powerful support possible for a given hypothesis.

Research Methodology

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. In it we study the various

steps that are generally adopted by a researcher in studying his research problem along with the

logic behind them.

Research Process:


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1. Formulating the research problem: There are two types of research problems,

viz., thosewhich relate to states of nature and those which relate to relationships

between variables. At the very outset the researcher must single out the problem

he wants to study, i.e., he must decide the general area of interest or aspect of a

subject-matter that he would like to inquire into.

2. Extensive literature survey: Once the problem is formulated, a brief summary of

it should be written down. At this juncture the researcher should undertake

extensive literature survey connected with the problem. For this purpose, the

abstracting and indexing journals and published or unpublished bibliographies are

the first place to go to. Academic journals, conference proceedings, government

reports, books etc., must be tapped depending on the nature of the problem.

3. Development of working hypotheses: After extensive literature survey,researcher should state in clear terms the working hypothesis or hypotheses.

Working hypothesis is tentative assumption made in order to draw out and test its

logical or empirical consequences.

4. Preparing the research design: The research problem having been formulated in

clear cut terms, the researcher will be required to prepare a research design, i.e.,

he will have to state the conceptual structure within which research would be

conducted.

5. Determining sample design: All the items under consideration in any field of

inquiry constitutea universe or population. A complete enumeration of all the

items in the population is known as a census inquiry.

A brief mention of the important sample designs is as follows:

Deliberate sampling, Simple random sampling, Systematic sampling, Stratified sampling,

Quota sampling, Cluster sampling and area sampling, Multi-stage sampling, Sequentialsampling.


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6. Collecting the data: In dealing with any real life problem it is often found that data at hand

are inadequate, and hence, it becomes necessary to collect data that are appropriate. There are

several ways of collecting the appropriate data which differ considerably in context of money

costs, time and other resources at the disposal of the researcher.

Primary data can be collected either through experiment or through survey. If the researcher

conducts an experiment, he observes some quantitative measurements, or the data, with the help

of which he examines the truth contained in his hypothesis. But in the case of a survey, data can

be collected by any one or more of the following ways:

(i) By observation: This method implies the collection of information by way of

investigators own observation, without interviewing the respondents. The information

obtained relates to what is currently happening and is not complicated by either the past

behaviour or future intentions or attitudes of respondents. This method is no doubt anexpensive method and the information provided by this method is also very limited. As

such this method is not suitable in inquiries where large samples are concerned.

(ii)Through personal interview: The investigator follows a rigid procedure and seeks

answersto a set of pre-conceived questions through personal interviews. This method of

collecting data is usually carried out in a structured way where output depends upon the

ability of the interviewer to a large extent.

(iii)Through telephone interviews: This method of collecting information involves contacting

the respondents on telephone itself. This is not a very widely used method but it plays an

important role in industrial surveys in developed regions, particularly, when the survey

has to be accomplished in a very limited time.

(iv) By mailing of questionnaires: The researcher and the respondents do come in contact

with each other if this method of survey is adopted. Questionnaires are mailed to the

respondents with a request to return after completing the same. It is the most extensively

used method in various economic and business surveys. Before applying this method,

usually a Pilot Study for testing the questionnaire is conduced which reveals the

weaknesses, if any, of the questionnaire. Questionnaire to be used must be prepared very

carefully so that it may prove to be effective in collecting the relevant information.


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(v)Through schedules: Under this method the enumerators are appointed and given training.

They are provided with schedules containing relevant questions. These enumerators go to

respondents with these schedules. Data are collected by filling up the schedules by

enumerators on the basis of replies given by respondents. Much depends upon the

capability of enumerators so far as this method is concerned. Some occasional field

checks on the work of the enumerators may ensure sincere work.

The researcher should select one of these methods of collecting the data taking into

consideration the nature of investigation, objective and scope of the inquiry, finanical resources,

available time and the desired degree of accuracy. Though he should pay attention to all these

factors but much depends upon the ability and experience of the researcher. In this context Dr

A.L.Bowley very aptly remarks that in collection of statistical data commonsense is the chief

requisiteand experience the chief teacher.

7. Execution of the project: Execution of the project is a very important step in the

researchprocess. If the execution of the project proceeds on correct lines, the data to be collected

would be adequate and dependable.

8 Analysis of data: After the data have been collected, the researcher turns to the task of

analysing them. The analysis of data requires a number of closely related operations such as

establishment of categories, the application of these categories to raw data through coding,

tabulation and then drawing statistical inferences.\

9. Hypothesis-testing: After analysing the data as stated above, the researcher is in a position to

test the hypotheses, if any, he had formulated earlier. Do the facts support the hypotheses or they

happen to be contrary?

10. Generalisations and interpretation: If a hypothesis is tested and upheld several times, it

maybe possible for the researcher to arrive at generalisation, i.e., to build a theory.

11. Preparation of the report or the thesis: Finally, the researcher has to prepare the report ofwhat has been done by him. Writing of report must be done with great care keeping in view the

following:

1. The layout of the report should be as follows: ( i) the preliminary pages; (ii) the

main text, and (iii) the end matter.


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In its preliminary pages the report should carry title and date followed by acknowledgementsand

foreword. Then there should be a table of contents followed by a list of tables and list of graphs

and charts, if any, given in the report.

The main text of the reportshould have the following parts:

(a)Introduction: It should contain a clear statement of the objective of the research andan

explanation of the methodology adopted in accomplishing the research. The scope of the

study along with various limitations should as well be stated in this part.

(b)Summary of findings: After introduction there would appear a statement of findingsand

recommendations in non-technical language. If the findings are extensive, they should

be summarised.

(c)Main report: The main body of the report should be presented in logical sequence and

broken-down into readily identifiable sections.

(d)Conclusion: Towards the end of the main text, researcher should again put down the

results of his research clearly and precisely. In fact, it is the final summing up.

At the end of the report, appendices should be enlisted in respect of all technical data.

Bibliography,i.e., list of books, journals, reports, etc., consulted, should also be given in the end.Index should also be given specially in a published research report.

2. Report should be written in a concise and objective style in simple language avoiding

vague expressions such as it seems, there may be, and the like.

3. Charts and illustrations in the main report should be used only if they present the

information more clearly and forcibly.

4. Calculated confidence limits must be mentioned and the various constraints experiencedin conducting research operations may as well be stated.


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Data Analysis and Interpretation:

ARPU analysis of Vodafone, Reliance and all India:

Graphs for circle wise APRU, average monthly subscribers, average monthly revenue

and growth rate of average monthly subscribers and average monthly revenue for are

shown below.

Graphs are drawn on quarterly basis from 1st quarter of 2008 to 1st quarter of 2010.

Two Y-axes are used one for growth rate of subscribers and revenue in percentage over

the previous quarters (i.e. right Y-axis) and another for ARPU, average monthly revenue

and average monthly subscribers(i.e. left Y-axis).

Purpose of using two Y-axes is to understand clear relation between ARPU, subscribers,revenue and growth rate of subscribers and revenue.

Graphs for individual circles separately are not shown because ARPU trends of

individual circle is very much in line with aggregate ARPU trend of the all the circles

belonging to the type of circle to which circle belongs.

Dotted lines are used for growth rate of average monthly subscribers and revenue, and

thick dark black line is used for ARPU, other thin lines are for average monthly

subscribers and revenue during the corresponding quarter.

Relation Between ARPU, average monthly subscribers and revenue:

LetR stand for the revenue of operators,NA stand for the average number of

subscribers, andARPUstand for the Group's ARPU, then we get the formula

Differentiating equation (1), and get:


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From equation (2), we can conclude that ARPU is positively related toR, and

negatively related to NA. When both R and NA change, the change direction of ARPU

could be drawn by comparing dR and (R*dNA/NA)

From equation (3), it is clear that, when R and NA change in the same proportion,

ARPUwould remain constant. And there could be three possibilities for its declination:R

keeps the same butNA increases,NA remains constant butR falls, and bothR andNA

change in the same direction with larger change proportion of the later one.

Number of Circles and there types:

In India there total 23 circles which are categorized into four types namely Metro,

Type A, Type B and Type C. Name of the circle along with their type are given below.

Circle Type Name of Circles

Metro Delhi, Mumbai, Kolkata, Chennai

Type A Maharashtra, Gujarat, AP, Karnataka, TN

Type B Kerala, Punjab, Haryana, UP(W), UP(E), Rajasthan, MP

Type C WB, HP, Orissa, Bihar, Assam, NE, J&K


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ARPU analysis of Vodafone circle wise and all India:

Company Circle Quarter Wise Data

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

VodafoneEssar

Metro

Avg Monthly Subscribers (inlacs)

141.42 151.90 162.56 173.71 186.30 198.91 209.61 221.19 236.68

Growth Rate of Subscribers 7.42 7.02 6.86 7.25 6.77 5.38 5.52 7.00

Avg Monthly Revenue(in crores) 489.63 476.37 461.26 490.00 472.65 483.32 471.80 476.47 494.55

Growth Rate of Revenue -2.71 -3.17 6.23 -3.54 2.26 -2.38 0.99 3.79

ARPU 346 314 284 282 254 243 225 215 209

TypeA


90.76 100.14 109.45 119.15 130.34 142.33 153.14 165.16 180.22



Growth Rate of Revenue 0.92 -2.18 5.76 1.66 1.67 -5.57 -3.66 -2.17

ARPU 271 248 222 215 200 186 164 146 131

TypeB


187.78 214.56 246.73 281.74 319.64 358.47 394.98 432.80 475.44



Growth Rate of Revenue 9.87 2.66 13.25 8.50 2.57 -4.53 0.86 4.83

ARPU 235 226 202 200 192 175 152 140 133

TypeC


1.83 12.23 26.38 38.75 52.10 68.97

Growth Rate of Subscribers 567.27 115.72 46.89 34.44 32.39Avg Monthly Revenue(in crores) 2.58 18.24 27.53 36.32 43.79 58.79

Growth Rate of Revenue 606.92 50.92 31.92 20.57 34.26

ARPU 141 149 104 94 84 85

AllIndia


419.96 466.61 518.74 576.43 648.50 725.54 796.48 871.24 961.30



Growth Rate of Revenue 2.77 -0.63 9.26 3.85 2.93 -3.27 0.60 4.18

ARPU 280 259 232 228 210 194 171 157 148


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346314

284 282

254 243225 215 209

-6

-4

-2

0

2

4

6

8

0

100

200

300

400

500

600

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

GrothRatein

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etage

Vodafone Metro Circles AvgMonthly

Subscribers

(in lacs)Avg

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crores)

ARPU

Growth

Rate of

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Rate of

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271

248

222215

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-8

-6

-4

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0

2

4

6

8

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0

50

100

150

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Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

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etage

Vodafone Type A CirclesAvg

Monthly

Subscribers

(in lacs)

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Revenue(in

crores)

ARPU

Growth

Rate of

Subscribers

Growth

Rate of

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235 226202 200 192

175152

140 133

-10

-5

0

5

10

15

20

0

100

200

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Vodafone Type B Circles AvgMonthly

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(in lacs)

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Growth

Rate of

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141

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Vodafone Type C Circles AvgMonthly

Subscribers

(in lacs)

Avg

Monthly

Revenue(in

crores)

ARPU

Growth

Rate of

Subscribers

Growth

Rate ofRevenue


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280259

232 228210

194171

157 148

-6

-4

-2

0

2

4

6

8

10

12

14

0

200

400

600

800

1000

1200

1400

1600

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

GrothRat

ein

Percetage

Vodafone All India

Avg

Monthly

Subscribers

(in lacs)

Avg

Monthly

Revenue(in

crores)

ARPU

Growth

Rate of

Subscribers

Growth

Rate of

Revenue


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Vodafone Circle Type Wise ARPU:

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Metro 346 314 284 282 254 243 225 215 209

Type A 271 248 222 215 200 186 164 146 131

Type B 235 226 202 200 192 175 152 140 133Type C NA NA NA 141 149 104 94 84 85

AllIndia

280 259 232 228 210 194 171 157 148

0

50

100

150

200

250

300

350

400

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

Vodafone Circle Typewise ARPU

Metro

Type A

Type B

Type C

All India


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Interpretation:

Continues decline in ARPU in all type of circles.

Increase in no of subscribers in all type of circles.

Almost linear decrease and linear increase in ARPU and average subscribers during the

period respectively for all types of circles.

Average revenue for Metro and Type A circles is fairly constant i.e. there is no or very

less increase in average revenue of such circles where as Type C circles has shown

increase in both subscribers and revenue and for Type B circles it is fairly constant from

1st quarter of 2009.

After launch in 4

th

quarter of 2008 sharp rise in the both subscribers and revenuefollowed by sharp decline in ARPU of Type C circles is seen.

Growth Rate of subscribers for all types of circles is fairly constant with very less

fluctuations.

Continues fluctuations in the growth rate of average revenue in all the graphs.

In some quarters there is also negative growth rate of average revenue.

In all the graphs growth rate of average revenue is very less as compare to growth rate of

average subscribers.

Company is generating very high amount of average monthly revenue in metro and Type

B circles with around Rs 480 crores and Rs600 crores of average monthly revenue in

metro and Type B circles respectively.

Growth Rate above 100% for Type C circles in 2nd quarter after its launch in Type C

circles.

ARPU of Metro Circles is high as compared to other types of circles.

ARPU of Type C Circles is very low and is below Rs100 in last four quarters till March

2010.


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ARPU analysis of Reliance circle wise and all India:

Company Circle Avg Monthly Subscribers (in lacs)

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

Reliance

Metro


3.21 4.05 5.14 5.99 7.24 9.38 11.19 12.72

Growth Rate of Subscribers 26.34 26.87 16.60 20.80 29.52 19.34 13.66Avg Monthly Revenue(in

crores) 2.96 2.57 3.33 2.85 6.10 7.67 14.23 10.33

Growth Rate of Revenue -13.12 29.47 -14.47 114.08 25.61 85.65 -27.40ARPU 92 64 65 48 84 82 127 81

TypeB


14.8616.57 18.50 21.13 24.19 27.48 30.37 35.06


crores) 16.64 19.30 17.54 21.92 24.90 28.00 28.79 35.08

Growth Rate of Revenue 16.02 -9.13 25.00 13.56 12.46 2.83 21.85

ARPU 112 117 95 104 103 102 95 100

TypeC


47.02 54.86 62.79 70.68 78.09 85.10 91.26 99.63


crores)82.08 93.24 88.25 81.02 91.24 92.76 86.25 90.47

Growth Rate of Revenue 13.59 -5.36 -8.18 12.61 1.67 -7.02 4.90

ARPU 175 170 141 115 117 109 95 91

AllIndia


65.09 75.48 86.43 97.80 109.52 121.96 132.82 147.41


crores)101.68 115.12 109.12 105.80 122.24 128.43 129.28 135.89

Growth Rate of Revenue 13.21 -5.21 -3.04 15.54 5.06 0.66 5.12

ARPU 156 153 126 108 112 105 97 92


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92

6465

48

8482

127

81

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

0

20

40

60

80

100

120

140

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

Groth

Ratein

Percetage

Reliance Metro Circles

Avg

Monthly

Subscribers

(in lacs)

Avg

Monthly

Revenue(in

crores)

ARPU

Growth

Rate of

Subscribers

Growth

Rate of

Revenue


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112117

95

104 103 102

95

100

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

0

20

40

60

80

100

120

140

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

GrothRatein

Percetage

Reliance Type B CirclesAvg

Monthly

Subscribers

(in lacs)

Avg

Monthly

Revenue(in

crores)

ARPU

Growth

Rate of

Subscribers

Growth

Rate of

Revenue

175170

141

115 117109

9591

-10

-5

0

5

10

15

20

0

20

40

60

80

100

120

140

160

180

200

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

GrothRatein

Percetage

Reliance Type C Circles AvgMonthly

Subscribers

(in lacs)Avg

Monthly

Revenue(in

crores)

ARPU

Growth

Rate of

Subscribers

Growth

Rate of

Revenue


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156153

126

108112

105

9792

-10

-5

0

5

10

15

20

0

20

40

60

80

100

120

140

160

180

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

GrothRatein

Percetage

Reliance All IndiaAvg

Monthly

Subscribers

(in lacs)

Avg

Monthly

Revenue(in

crores)

ARPU

Growth

Rate ofSubscribers

Growth

Rate of

Revenue


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Reliance Circle Type wise ARPU:

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Metro 92 64 65 48 84 82 127 81Type B 112 117 95 104 103 102 95 100

Type C 175 170 141 115 117 109 95 91

All India 156 153 126 108 112 105 97 92

0

20

40

60

80

100

120

140

160

180

200

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09

Reliance Circle Type wise ARPU

Metro

Type B

Type C

All India


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Interpretation:

Most of the trends for reliance are same as that of Vodafone.

o Continues decline in ARPU except in Kolkata i.e metro circle where it shows

continues fluctuations.

o Increase in no of subscribers.

o Almost linear decrease and linear increase in ARPU (except Kolkata circle) and

average subscribers during the period respectively for all types of circles.

o Growth Rate of subscribers for all types of circles is fairly constant with very less

fluctuations.

o Continues fluctuations in the growth rate of average revenue in all the graphs.

o In some quarters there is also negative growth rate of average revenue.

o In all the graphs growth rate of average revenue is very less as compare to growth

rate of average subscribers.

For Metro circle i.e. Kolkata company has shown very high inconsistency in ARPU and

in Growth rate of subscribers and average monthly revenue.

Companys ARPU is been consistently very low as compare to Vodafone and overall all

India (i.e. putting all operators together) and it is below Rs100 for All India (Reliance).

ARPU of Metro Circles is very low and most of times its below Rs100 and Type C

circles ARPU is high as compared to other types of circles which is exactly opposite of

trend seen for Vodafone or All Indias general trends .


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ARPU analysis of all India:

Company Circle Avg Monthly Subscribers (in lacs)

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

All India

Metro

Avg Monthly Subscribers (in lacs) 242.51 240.82 259.99 283.06 307.96 331.73 355.23 379.08 397.04

Growth Rate of Subscribers -0.70 7.96 8.87 8.80 7.72 7.09 6.71 4.74


Growth Rate of Revenue -11.72 0.20 7.44 -2.87 -1.86 2.27 -4.85 4.24

ARPU 357 318 295 291 260 237 226 202 201

TypeA




Growth Rate of Revenue 11.02 2.51 9.95 2.34 2.83 -2.85 -0.94 3.38

ARPU 259 249 231 231 214 201 180 166 156

TypeB




Growth Rate of Revenue 8.94 3.22 14.26 5.29 3.34 -3.42 0.03 2.24

ARPU 236 227 208 213 200 186 163 147 139

TypeC


Growth Rate of Subscribers 16.84 15.56 15.04 17.57 15.91 13.83 14.01 -2.89


Growth Rate of Revenue 8.75 3.95 13.19 12.66 4.45 1.25 -2.45 -1.87

ARPU 226 210 189 186 178 161 143 122 124

AllIndia




Growth Rate of Revenue 5.00 2.46 11.15 3.65 2.42 -1.58 -1.54 2.38

ARPU 253 247 227 222 208 191 174 156 150


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253 247 227 222 208 191 174 156 150

-4

-2

0

2

4

6

8

10

12

14

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

GrothRatein

Perc

etage

All India

Avg

Monthly

Subscribers

(in lacs)

Avg

Monthly

Revenue(in

crores)

ARPU

Growth

Rate of

Subscribers

Growth

Rate of

Revenue


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All India Circle Type-wise ARPU analysis:

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Metro 357 318 295 291 260 237 226 202 201Type A 259 249 231 231 214 201 180 166 156

Type B 236 227 208 213 200 186 163 147 139

Type C 226 210 189 186 178 161 143 122 124

AllIndia

253 247 227 222 208 191 174 156 150


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253

247

227

222

208

191

174

156

150

100

120

140

160

180

200

220

240

260

280

300

320

340

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

ARPU

All India Circle Type-wise ARPU

Metro

Type A

Type B

Type C

All India


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Interpretation:

Continues decline in ARPU in all circles. For all India it declines from Rs357 in Q1 2008

to Rs150 in Q1 2010.

Continues Increase in no of subscribers and at the end of March 2010 there were 961.30lacks average monthly subscribers.

Almost linear decrease and linear increase in ARPU and average subscribers during the

period respectively.

Growth Rate of subscribers is constant in 2008 and after one spurt increase in 1st quarter

of 2009 it decrease subsequently in remaining three quarter and again increased to

10.34% in 1st

quarter of 2010.

Continues fluctuations in the growth rate of average revenue.

In 3rd and 4th quarter of 2009 there is negative growth rate of average revenue i.e. around

1.55%.

Growth rate of average revenue is very less as compare to growth rate of average

subscribers.

ARPU of Metro Circles is high as compared to other types of circles.

ARPU of Type C Circles is very low and is below Rs100 in last four quarters till March

2010.


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Observations and Findings:Reasons for Declining ARPU:

Though there is almost increase in subscribers and revenue, growth rate of revenue has

always remained below the growth rate of subscribers, which ultimately leads to continuesdecline in ARPU. As it can be seen from the above graphs for all circles, the ARPU is declining

in the recent past. There may be many reasons for this. Following may be some of the reasons for

declining ARPU.

Subscriber base has had a negative impact on the average revenue per user (ARPU) for

operators because of one main reason: the moment an operato

Project Report Dinesh Giri

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