For all practical purposes, the year 2000-01, was the first business year for most companies. For the first time, they actually concentrated on issues like network quality, marketing, tariff, revenue assurance—issues that are related to business and not regulation. The result is for everyone to see. Here is an in-depth look at the financial performance, subscriber growth, significant market changes, and industry issues in 2000-01.

Performance

The total billed revenue in the year 2000-01 was Rs 3,865.29 crore. While circles accounted for 49.79 percent, metros accounted for 51.21 percent.

The total net revenue or adjusted gross revenue that gives a more accurate picture of the industry stood at Rs 3,040.61 crore. The adjusted gross revenue, on which all the service providers calculate their revenue share to the government, actually, is the total billed revenue minus the passthrus, the service tax and the revenue accrued through the sale of handsets. This appears to be the industry size.

The circles have caught up with the metros in terms of revenues. At the end of 2000-01, the revenue was almost  equally divided. Out of the total figure of Rs 3,040.61 crore, the metros contributed 50.62 percent while the circles contributed 49.38 percent.

The total subscriber base as on 31 March 2001 reached 3.57 million, up 89 percent from a figure of 1.88 million on 31 March 2000. Some of the circles with low penetration registered extraordinary growth. The subscriber base in West Bengal and Rajasthan grew by more than 200 percent each. Drop in tariff as well as handset prices drove the subscriber growth. The drop in rentals will drive it in 2001-02.

Most of the subscribers added last year were prepaid subscribers. With rentals being as high as Rs 400-Rs 600 (They have come down only recently), most users with low usage preferred prepaid. In a market with low churn, prepaid suited the service providers as well, most of whom were just looking at adding the subscribers as the short-term strategy. Many service providers ran big campaigns for pre-paid, with separate brands, separate marketing strategies, and even separate advertising agencies. The result: about 70-80 percent of the new users in circles and 60-65 percent new users in metros went for prepaid.

With a low Average Revenue Per User (ARPU) typically, more prepaid customers meant lower ARPU for service providers. In the year 2000-01, the nationwide ARPU stood at Rs 731 rupees per month. Mumbai tops the list as the highest ARPU. However, surprisingly, the circle average is not too lower than the metro average as far as ARPU is concerned.

The ARPU actually dropped in the last two quarters. It dropped drastically in the third quarter. Apart from more prepaid new customers, the drop in tariff also contributed to the drop in ARPU. The ARPU for prepaid stood at Rs 450 per month while that for postpaid stood at Rs 970 approximately over the entire year 2000-01.

However, the drop in ARPU of own customers was offset by growing roaming revenue by the service providers. In the last quarter, this figure as a percentage of total revenue was as high as 30 percent for some metro operators, while it was about 22 percent for the circle operators. Going a step further, this figure in circles is a little non-uniform as cities like Bangalore and Hyderabad had a trend similar to the metros.