Lower tariffs reduce cell cos' average per user revenue

Updated on May 07, 2004 07:12 PM IST

The decline occurred despite a 30% rise in industry's total revenue to Rs 8308 cr and doubling of subscriber base, COAI said on Friday.

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PTI | ByPress Trust of India, New Delhi

The average revenue per user of private cellular operators have dropped by 17 per cent in 2003-04 from Rs 523 in the first quarter to Rs 432 in the fourth quarter mainly due to a continuous fall in tariffs.

The decline occurred despite a 30 per cent rise in the total industry's revenue during the year to Rs 8308 crore and doubling of subscriber base to 20.5 million by the end of March 2004, Cellular Operators Association of India (COAI) said on Friday.

It is estimated that the number of subscribers with a monthly ARPU of less than Rs 500 has gone up from 28 per cent in 2002 to 46 per cent in 2003.

"Thus the affordability of the services for subscribers was further enhanced during the year which fuelled subscriber growth. The total cellular subscriber base of the private GSM operators doubled from 10.1 million at the end of March 2003 to 20.5 million by the end of March 2004.

As a result, the industry is operating on wafer thin margins leaving it with inadequate resources to fund network expansion and growth to remote and rural areas, the association said.

Along with low ARPUs, the industry is also grappling with high cost of duties and levies. The industry payout to the government on account of licence fee and spectrum usage charges alone was to the tune of about Rs 1250 crore of which annual licence fee paid by private GSM operators was Rs 954 crore and payment for spectrum usage was Rs 290 crore.

Further, the operators are burdened with a significant access deficit charge which is adding to the cost of service, it said.

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