Will Average Revenues Per User In Pakistan Rise?
ARPUs - as they are known in the industry - is a simple but important number for gauging the profitability of telecom operators. Higher revenue per user usually means higher profits. Pakistan, with its low GDP, is not known for high ARPUs - actaully we are in the bottom 10% arpu countries of the world. For quite some time the arpus have been falling. The questions is - have they bottomed out? Telenor CEO said in an interview, ”Our ARPU is growing: in 2005 it was $3.20 per month; by 2006 it went up to $4.80.” What does the future hold?
Here’s a historical view of ARPU (in US$) and some commentary, taken from Pakistan Pulse, investment reprort from Merrill Lynch. The analyst in this report argues that low ARPUs need to be seen in perspective.
The sheen has been taken off the growth argument to some extent as current average ARPU’s of US$4 for cellular operators are among the lowest in the world and continue to decline. While growth via prepaid connections and declining tariffs has played their part, the role of inactive SIMs cannot be ignored. Inactive SIMs are assumed to have risen to 25% of outstanding SIMs and they represent not only a highly penetrated market but also a drag on ARPUs.
These inactive SIMs are there for a number of reasons. Pakistani who travel from abroad are responsible for many of these. Some companies, such as Telenor, write off customers after “3 months of silence”. Some companies may re-assign the SIMs to others.
So the question is - what can of services (data, other value added services) can encourage Pakistani consumers to spend more
Created by Babar Bhatti, TelecomPk.Net is a leading source of information and analysis about Pakistan Telecom industry.
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