ARPU stats for VAS in india

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Yesterday i posted an article on SMS based startups in india. It has some number crunching on VAS as well. The post made its way on friend feed and facebook. Sudhoo, one of my friends from IIT Bombay has a slightly different but equally optimistic take on these numbers. His quote goes

Blended ARPU for GSM customers is Rs 239 and for CDMA customers is as low as Rs 139 (Source: TRAI). With competitive intensity increasing, this is definitely going to decrease YoY. VAS currently contributes 7% to the revenues of which 55% is from SMS. This might increase though, lets see. Essentially the facts suggest that the VAS market should be 200*10%*500 mn *12 = Rs 120 bn or 0.12 trn INR on an optimistic basis. Still not bad One needs to see though how does the global slowdown melts the Indian telecom market.

I was planning to dig some of the recent reports from TRAI, but unfortunately their servers are down due to some firewall problem. I tried to dig some other numbers and here is the conclusion. September 2005 quarter end, the ARPU was INR 374 for GSM and INR 244  for CDMA. I took these start from mobilepundit. Even there,the post is titled, “ARPU declines to 374″. Which means it was higher previously. End of quarter December 2007, these numbers were INR 267 and INR 176 for CDMA These number are from startupduniya. The latest numbers are as quoted by sudhoo above. All this data is available at TRAI website. Thus we are seeing a decline in spending by users. Also, the number of users are increasing day by day. The rate of growth of users is quite sharp as compared to ARPU’s. Which explains the increasing profits by telcos.

In my opinion, ARPU’s are not a justified metric. The important factor to note here is that cost of sending a SMS, making a call, and surfing web on mobile in also reducing with each day. These days you get SMS at as less as 50 paise (and in some cases even lesser). A call is as low as a rupee (some cases even lower).

I was tried to dig the volumes, but could not find any comparison as of now (TRAI’s website was still facing firewall problem at time of writing this). I still remember that when i was in school, mobile phones had just arrived, and it costed INR 25 for each call, outgoings were charges, and handsets were pretty costly. SMS used to cost 3 – 5 bucks. Now i roam around on 1 Re per minute. With these costs coming down, ARPUs will definitely come down.

I will post the volume analysis when i get my hands over the data.

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