What does ARPU indicate about a telco?

Telecom companies have increased tariff rates in the last few months and its effect has also been seen on the Average Revenue Per User (ARPU) of telecom companies for the first quarter. But most of the telecom companies want to improve their ARPU and as the launch of 5G services is in full swing. Only last week Bharti Airtel reported its results and said its ARPU is now at Rs 200.  So, what is ARPU? We will tell you all bout it here.

The Average Revenue Per User is the average revenue generated by a single active user over a period. ARPU gives an indication of profitability or profits on the basis of earnings per user. There is no standard for a good ARPU as it can vary depending on the location, industry and pricing model.

Companies measure the factors that contribute to the total income of the company with the help of ARPU. This helps companies to gauge their growth patterns and compare their success with competitors. This is a good indicator of the company’s revenue model and the company’s performance. If the ARPU is higher then the company is seen to be doing well in terms of financial performance.

ARPU calculation
ARPU = Total Revenue Generated During a Time Period/No of users during that same time period

Suppose the monthly income of a company is Rs 200 crore and the number of active users of the company is 1 crore. So, ARPU = ₹200 crore/1 crore = ₹200

You must have often seen or heard information about the ARPU of telecom companies when they come out.

In the last few months, telecom companies have increased their call rates, due to which their ARPU has increased and there are chances of your calls and internet data becoming more expensive in the coming days.