The industry average for RPM and Arpu hovered around 43 paise per minute and Rs 160 per user per month during the quarter. This indicates that the fierce price undercutting has more or less bottomed out. Sanity in pricing is coming back to the sector, said Gaurav Dua, an analyst with Sharekhan. In 2009, new entrants had resorted to drastic pruning of prices to gain market share. By mid-2010, they realised it was not a viable business model. Tata Docomo had unleashed a price war, followed by Reliance Communications (RComm), Uninor and Videocon Mobile services. "The sector is still promising for consumers and for investors. Basic economies of the sector remain. We do not see a let up in demand and innovation. Even if half of the operators shut shops, which is unlikely, we will still have a bunch of very competitive players in the market, said Mahesh Uppal, director, Com First India.
During the quarter under review, Airtel's Arpu stood at Rs 198, for Idea it was Rs 168 and Rs 111 for RComm. New entrant Uninor's Arpu increased slightly to Rs 99, driven by higher usage per subscription. RPM for Bharti and RComm was more or less flat at 44 paise, while for Idea it declined marginally to 41.8 paise, compared to 42.3 paise in the previous quarter. In the coming quarter, we will see increase in Arpu because of the launch of 3G services from the next quarter onwards. RPM will stabilise from here and may go up as there is no scope of tariffs going down further, said Nishi Verma, senior research analyst at Frost & Sullivan, South Asia & Middle East. "Investors might be cautious at this time but there is tremendous opportunity in the sector to take advantage," she added.