MTNL - Customer Registration Impacts Delhi Base, but ARPU Up

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Note -- this news article is more than a year old.

The number of mobile customers reported by state controlled Indian telco MTNL declined between March and June 2007 as the effect of the customer registration programme impacted growth. The operator provides mobile service on the GSM and CDMA standards in India's largest and third largest cities Mumbai and Delhi. In both markets MTNL benefited from a market share gain in March due to disconnections by CDMA operator Reliance in relation to the registration programme but in April the operator's Delhi business suffered a 21% loss of customers of its own reducing the size of the overall customer base from 2.87m to 2.60m.

In the two months to 30th June the number of customers grew again to 2.73m, but this still left it 4.7% down quarter on quarter. Why the loss should only have been suffered in Delhi, and not in Mumbai, is not clear and the operator offers no commentary to explain the trend.

MTNL is the smallest of the six mobile operators in Delhi, having been overtaken by IDEA Cellular in August last year, but fourth out of six in Mumbai, ahead of Tata Teleservices and the beleagered BPL Communications. The company's GSM business is much the larger of the two, the number of CDMA customers standing at just 122k at the end of June 2007, after net additions of 42k in the year.

The disconnections in Delhi did have the positive effect of boosting MTNL's ARPU in the predominant prepaid part of the customer base from Rs157 per month in Q1 2007 (the fourth quarter of the company's 2006/07 financial year) to Rs179 in Q2 2007 (the first quarter of the 2007/08 financial year). However, the rate did not quite match the Rs184 recorded in the same quarter of 2006.

With prepaid ARPU staying almost flat in Mumbai between March and June, the improvement in Delhi precipitated an increase of Rs10 per month in MTNL's overall prepaid ARPU to Rs184 per month. By contrast, the overall contract ARPU across the two licence areas fell to Rs276 per month, having remained stable at Rs303 per month between the December and March quarters after being as high as Rs350 in Q2 2006. Nevertheless, thanks to a 21% increase in the size of the customer base in the year to 30th June, overall cellular revenues were up 14% year on year to just over Rs2bn in Q1 2007/08, representing 17% of the MTNL group total - up from 14% a year ago.

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