project report dinesh giri
TRANSCRIPT
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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.
http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/##http://www.economywatch.com/world-industries/telecommunications/## -
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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.
http://www.economywatch.com/world-industries/telecommunications/world-telecom-industry.html##http://www.economywatch.com/world-industries/telecommunications/world-telecom-industry.html##http://www.economywatch.com/world-industries/telecommunications/world-telecom-industry.html##http://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.html##http://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.html##http://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.html##http://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.html##http://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.html##http://www.economywatch.com/world-industries/telecommunications/telecom-industry-analysis.html##http://www.economywatch.com/world-industries/telecommunications/world-telecom-industry.html##http://www.economywatch.com/world-industries/telecommunications/world-telecom-industry.html##http://www.economywatch.com/world-industries/telecommunications/world-telecom-industry.html## -
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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%
Urban Subscribers 393.45 Million (67.3%)
Rural Subscribers 190.88 Million (32.7%)
GSM Subscribers 478.68 Million (81.9%)
CDMA Subscribers 105.64 Million (18.1%)
Teledensity 49.60
Urban Teledensity 112.03
Rural Teledensity 23.08
Wireline Subscribers
Total Wireline Subscribers 36.96 Million
% change over the previous quarter -0.29%
Urban Subscribers 27.03 Million (73.1%)
Rural Subscribers 9.93 Million (26.9%)
Teledensity 3.14
Urban Teledensity 7.70
Rural Teledensity 1.20
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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.
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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
Avg Monthly Subscribers (inlacs)
90.76 100.14 109.45 119.15 130.34 142.33 153.14 165.16 180.22
Growth Rate of Subscribers 10.34 9.29 8.86 9.39 9.20 7.59 7.85 9.12
Avg Monthly Revenue(in crores) 245.92 248.17 242.75 256.74 261.01 265.37 250.58 241.40 236.15
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
Avg Monthly Subscribers (inlacs)
187.78 214.56 246.73 281.74 319.64 358.47 394.98 432.80 475.44
Growth Rate of Subscribers 14.26 15.00 14.19 13.45 12.15 10.18 9.58 9.85
Avg Monthly Revenue(in crores) 441.89 485.50 498.40 564.46 612.41 628.12 599.69 604.88 634.11
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
Avg Monthly Subscribers (inlacs)
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
Avg Monthly Subscribers (inlacs)
419.96 466.61 518.74 576.43 648.50 725.54 796.48 871.24 961.30
Growth Rate of Subscribers 11.11 11.17 11.12 12.50 11.88 9.78 9.39 10.34
Avg Monthly Revenue(in crores) 1177.43 1210.04 1202.41 1313.77 1364.32 1404.34 1358.39 1366.54 1423.60
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
Perc
etage
Vodafone Metro Circles AvgMonthly
Subscribers
(in lacs)Avg
Monthly
Revenue(in
crores)
ARPU
Growth
Rate of
Subscribers
Growth
Rate of
Revenue
271
248
222215
200
186
164
146
131
-8
-6
-4
-2
0
2
4
6
8
10
12
0
50
100
150
200
250
300
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
GrothRatein
Perc
etage
Vodafone Type A CirclesAvg
Monthly
Subscribers
(in lacs)
Avg
Monthly
Revenue(in
crores)
ARPU
Growth
Rate of
Subscribers
Growth
Rate of
Revenue
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235 226202 200 192
175152
140 133
-10
-5
0
5
10
15
20
0
100
200
300
400
500
600
700
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
GrothRatein
Perceta
ge
Vodafone Type B Circles AvgMonthly
Subscribers
(in lacs)
Avg
Monthly
Revenue(in
crores)
ARPU
Growth
Rate of
Subscribers
Growth
Rate of
Revenue
141
149
104
94
84 85
0
100
200
300
400
500
600
700
0
20
40
60
80
100
120
140
160
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
GrothRatein
Percetage
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
Avg Monthly Subscribers (inlacs)
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
Avg Monthly Subscribers (inlacs)
14.8616.57 18.50 21.13 24.19 27.48 30.37 35.06
Growth Rate of Subscribers 11.48 11.65 14.22 14.47 13.63 10.52 15.42Avg Monthly Revenue(in
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
Avg Monthly Subscribers (inlacs)
47.02 54.86 62.79 70.68 78.09 85.10 91.26 99.63
Growth Rate of Subscribers 16.68 14.45 12.55 10.49 8.97 7.24 9.17Avg Monthly Revenue(in
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
Avg Monthly Subscribers (inlacs)
65.09 75.48 86.43 97.80 109.52 121.96 132.82 147.41
Growth Rate of Subscribers 15.97 14.51 13.15 11.98 11.35 8.91 10.98Avg Monthly Revenue(in
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
Avg Monthly Revenue(in crores) 866.72 765.15 766.67 823.71 800.09 785.20 803.05 764.13 796.52
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
Avg Monthly Subscribers (in lacs) 551.32 634.97 701.48 772.41 852.12 932.92 1011.99 1091.40 1196.77
Growth Rate of Subscribers 15.17 10.48 10.11 10.32 9.48 8.48 7.85 9.65
Avg Monthly Revenue(in crores) 1426.67 1583.82 1623.58 1785.19 1826.98 1878.61 1825.11 1807.98 1869.02
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
Avg Monthly Subscribers (in lacs) 443.23 500.82 564.24 631.71 706.39 785.36 866.58 963.68 1041.79
Growth Rate of Subscribers 12.99 12.66 11.96 11.82 11.18 10.34 11.20 8.11
Avg Monthly Revenue(in crores) 1045.79 1139.26 1175.98 1343.73 1414.78 1461.98 1412.04 1412.48 1444.12
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
Avg Monthly Subscribers (in lacs) 211.92 247.60 286.12 329.15 387.00 448.57 510.61 582.14 565.30
Growth Rate of Subscribers 16.84 15.56 15.04 17.57 15.91 13.83 14.01 -2.89
Avg Monthly Revenue(in crores) 478.96 520.88 541.44 612.88 690.49 721.19 730.18 712.28 698.99
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
Avg Monthly Subscribers (in lacs) 419.96 466.61 518.74 576.43 648.50 725.54 796.48 871.24 961.30
Growth Rate of Subscribers 11.11 11.17 11.12 12.50 11.88 9.78 9.39 10.34
Avg Monthly Revenue(in crores) 3818.14 4009.11 4107.68 4565.50 4732.35 4846.98 4770.38 4696.88 4808.64
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