Internal Competition Of CMOs Preventing Them From APRPU
CMOs requested a 250 percent increase in ARPU, or from 80 cents to $2, from the National Assembly Standing Committee on IT and Telecommunication in order to cover rising costs.
Internal competition among cellular mobile operators (CMOs) prevents them from raising average revenue per user (ARPU), which has a negative impact on their business plans, according to official sources in the telecom industry.
There are no restrictions from the regulator, the Pakistan Telecommunication Authority (PTA), on CMOs to increase ARPU, with the exception of Jazz, which is a significant market player (SMP) and requires prior approval for changes in tariff to avoid market disruption, according to the officials. The telecom sector was deregulated in 2003.
Internal competition among CMOs lead to a reduction in average revenue per user (ARPU) as each operator competes to attract and retain customers by offering lower prices and more attractive packages.
CMOs requested a 250 percent increase in ARPU, or from 80 cents to $2, from the National Assembly Standing Committee on Information Technology and Telecommunication in order to cover rising costs.
They added that Pakistan is the 237th most affordable nation out of 239, and that with their current ARPU, they are unable to compete with the EU or the US, where prices are roughly $40. A representative for CMOs added that they only require an increase in ARPU from the current 80 percent level.
However, it was discovered that there are no restrictions on three operators, including Ufone, Zong, and Telenor, to raise prices at any time when this correspondent contacted senior officials in the Ministry of Information Technology and Telecommunication, PTA, and sector experts to analyse the barriers to increasing ARPU. Since the Pakistani telecom market is unregulated, only SMP, or Jazz, can request government intervention.
The regulations prohibit giving an SMP complete control because doing so could disrupt the market, even by lowering the tariff. However, CMOs are hesitant to raise rates on their own out of concern for losing subscribers.
Official sources continued, “If one operator increases package prices, it may lead to a loss of subscribers. For this reason, all are looking at each other and competing to attract more subscribers, even at lower rates.
According to PTA’s annual report, the mobile sector modestly improved in terms of ARPU, as evidenced by a rise from Rs. 215 per month in the fiscal years 2020–21 to Rs. 220 per month in the fiscal years 2021–22. The growth of mobile services, the addition of new subscribers, the increased use of data services, and an increase in tariffs can all be credited with this rise.
Mobile operators’ revenue comes from the sale of data services, which increased from 38% of gross revenue in 2017–18 to 61% in the following year.
The average monthly revenue per user (ARPU) for data in the mobile sector was Rs. 237 in 2021–2022, reflecting a marginal increase of 0.37%. This indicates that the average cost of data in Pakistan has further decreased.
This is further supported by the calculation of the effective price per GB, which reveals that in 2021–2022, the price (measured in terms of revenue per GB) decreased further to Rs. 34.23 from Rs. 37.86 the year prior.
According to the PTA report, Jazz’s ARPU in 2021–22 was Rs. 253, Ufone’s was Rs. 205, Zong’s was Rs. 216, and Telenor’s was Rs. 178, for a total of Rs. 220.