Statistical Modelling Approaches to Estimation of Average Revenue per User in Telecom Service- a Case Study

Indian telecom market is the second largest telecom market in world just after china. According to the recent reports by TRAI, Indian telecom sector has the lowest tariff in the world. Indian telecom market has 10-12 service providers striving for the market share at any point of time. Intense competition has put pressure on service providers to reduce the tariff prices. India being a developing country, people are more concerned about affordability of mobile services, because of this reason service providers have come up with per second billing from per minute billing that is nothing but implementation of pay per use tariff concept. Recent trends in the Indian telecom sector have shown growth in the number of subscribers but at the same time ARPU has been falling continuously. ARPU is one of the indicators of market performance of the service provider. In this paper a model has been developed to predict the future trends in the ARPU so that TSP’s can formulate new strategies to increase their ARPU. This study considers different factors that affect the ARPU of the TSP, Multiple linear regression equation has been formulated to explain the factors that determine the ARPU. Results of the model developed show that ARPU depends on subscriber base, number of operators and percentage of new users added periodically. This study considers Karnataka Region Telecom services for constructing model for ARPU prediction.