For telecom companies, the third quarter results ending December 31, 2008, was much in sync with expectations. Though telcos took a beating on their minutes of usage (MoU), Bharti Airtel and Idea Cellular posted net profits much in line with expectations at Rs 2,159.3 crore and Rs 219.45 crore, respectively.

However, Reliance Communications (RComm) registered a net profit of Rs 1,410.31 crore for Q3, which was below expectations. On a quarter-on-quarter (q-o-q) basis, its profits fell 7.8% from Rs 1,530 crore.

Although the MoUs have increased on an absolute level for telcos, the trend for the quarter has been declining MoUs on a q-o-q basis. MoUs for Bharti, RComm and Idea declined (q-o-q) by 4%, 3.1% and 1.7% respectively. Bharti?s strategy to come out with free minutes of usage to its subscribers impacted the MoUs, bringing it down to 505 per subscriber per month as against RComm?s MoU to 410 per subscriber per month.

Consequently, revenues per minute (RPMs) for Bharti rose for the first time by 2.1% (q-o-q) to 64 paise. Its average revenues per user (ARPUs) dwindled by 9.8% (y-o-y) and 1.9% (q-o-q) to Rs 324 per user per month.

However, for RComm, ARPUs fell substantially by 26.6% (y-o-y) and 7.4% (q-o-q) to Rs 251 per user per month and RPMs were down by 18.8% (y-o-y) and 3.1% (q-o-q) to 61 paise. According to analysts, constant decline in ARPUs and MoUs led RComm to underperform in the quarter.

Despite a decline in ARPUs, analysts feel that with the GSM licence acquired by the company in January 2008 and the recent GSM service roll out in Mumbai, it would be able to accelerate the pace of its net adds and improve market-share in the fastest-growing mobile market.

In Q3 of FY2009, Idea Cellular exceeded expectations and recorded robust revenues of Rs 2,731.1 crore which was driven by the company’s increased subscriber base, that grew by strong 62.4% (y-o-y) and 12.6% (q-o-q) to 34.2 million.

ARPUs (ex-Spice) rose by 1.6% (q-o-q) and decreased by 5.7% (y-o-y) to Rs 271. For Idea, MoUs fell on a quarterly basis, RPMs increased 3.2% (q-o-q) to 64 paise but the same dipped by 13% (y-o-y). Targeting a pan-India presence, the company is anticipated to foray into five new circles by the end of calendar year 2009.

According to analysts, being a late entrant in circles like Orissa (to launch in 1QFY2010), Tamil Nadu (2QFY2010 launch scheduled) and West Bengal, the company could face ARPU and EBITDA pressures in these circles as it launches and gains scale.

Another factor impacting the MoUs of telcos is their urge to reach rural and semi-rural circles in a bid to increase subscriber base. But ARPUs in these circles are drastically lower than the ones from the urban circles.