ARPU - Why there is a difference between TRAI and Operator's Annual/Quarterly Report

COAI in its annual report, publishes 2 different ARPU (Average Revenue Per User). First ARPU is based on TRAI methodology while second ARPU is reported by different telecom operators in their annual/quarterly report.

The difference between them is exceptionally high. This not only confuses people, but they constantly make errors while reporting ARPU. Lets explore the reason for such huge gap.

Overall telecom industry revenue is clubbed under 4 heads.

Revenue from a) Access Services b) NLD (National Long Distance) c) ILD (International Long Distance) and d) Others (VAST, ISP etc).

A telecom operator includes revenue from all of these heads while calculating ARPU. However TRAI only considers revenue from Access services while calculating its ARPU. 

Moreover TRAI only takes AGR (Adjusted Gross Revenue) into account for ARPU.

AGR = Gross Revenue  - Pass Through Charges

Originating operator has to pay 6p for every minute of traffic to terminating operator. e.g. If a Airtel customer calls a Vodafone customer for 5 min, Airtel will pay (30p = 6p*5min) to Vodafone. This revenue is called pass through charge/rate (PTC). 

Aggregate gross revenue is arrived by deducting PTC from gross access revenue. In CY 2017, AGR was only 67% of GR.

Above two factors are key reason for such large difference between ARPU reported by TRAI and Operators.

Refer to my earlier post for understanding different components  of TRAI ARPU and how it changed in last 2 years.