In today’s data-driven, hyper-connected world, Average Revenue Per User (ARPU) is one of the most frequently cited metrics in telecoms. It shows up in boardrooms, earnings calls, regulatory filings, and investor briefings. For regulators, it can indicate consumer value or potential price gouging. For operators, it’s a sign of financial health or customer quality. For analysts, it’s a proxy for market competitiveness.
But behind this clean, one-size-fits-all metric lies a tangle of accounting assumptions, strategic manipulations, and regulatory grey zones that few outside the industry truly understand — and it’s starting to cause real friction.
ARPU: A Metric Without a Standard
Unlike EBITDA or ARPU’s cousin, Average Margin Per User (AMPU), ARPU has no standard definition in accounting or regulation. It’s not governed by IFRS, GAAP, or any universal telecom rulebook. This makes it both useful and dangerous.
Operators define “user” differently: some count active SIMs, others count unique subscribers. Some include only telecom services (voice, data), while others bundle in OTT content, insurance, and device revenues. In prepaid-heavy markets, where SIM rotation is common, reported ARPU can swing wildly based on methodology.
This lack of standardization becomes a serious issue when ARPU feeds into regulatory pricing models, tax assessments, interconnection fees, or universal service contributions.
When ARPU Meets Regulation: Real-World Conflicts
Let’s look at some real-world telecom disputes where ARPU calculations were not just technical details — they triggered headlines, fines, and billion-dollar liabilities.
India: The AGR Catastrophe
In what became one of the most significant telecom disputes globally, Indian regulators interpreted “Adjusted Gross Revenue” (AGR) — a cousin of ARPU used to calculate license fees and spectrum usage charges — more broadly than operators expected.
Telecom companies like Bharti Airtel and Vodafone Idea excluded non-core revenues like handset sales and rent from their AGR calculations. But the government insisted these were part of the total revenue base. The Supreme Court sided with the government, leading to retroactive fees of over $13 billion, pushing Vodafone Idea to the brink of collapse.
While not strictly about ARPU, the core issue was the same: what counts as “revenue per user” when determining regulatory dues?
Nigeria: MTN vs. the NCC
In 2018, MTN Nigeria was accused of underreporting subscriber numbers and ARPU figures, triggering a multi-billion-dollar demand from regulators and a major loss in shareholder value. While the case was eventually settled, it raised critical questions about data transparency, revenue disclosure, and multi-SIM user accounting — especially in emerging markets where subscriber duplication is rampant.
The IFRS 15 Challenge: A New Kind of Transparency
Then came IFRS 15 — a global accounting standard that redefined how revenue from bundled contracts should be recognized.
Under IFRS 15, when an operator offers a subsidized handset with a service plan, revenue must be allocated across both the device and the service based on fair value. This often means deferring revenue over the contract’s life or recognizing a portion upfront.
The result? ARPU drops — at least on paper — even when total cash flow remains unchanged. This has caused confusion among investors and discrepancies with regulatory filings, which often expect more “cash-based” or “gross” revenue metrics.
In markets like the UK, Australia, and Germany, operators were suddenly reporting lower service revenues and lower ARPU — not because business was worse, but because accounting rules had changed.
Why It Matters: ARPU as a Strategic Lever (and a Risk)
In practice, ARPU is often “managed” to tell a specific story:
- A higher ARPU signals premium users, cross-selling success, or pricing power.
- A lower ARPU may support arguments for affordability, rural investment gaps, or price regulation exemptions.
But this becomes problematic when regulatory authorities and operators use different definitions — and even more so when taxes or obligations are tied to ARPU performance.
What was once a simple financial indicator has become a political and strategic lever, subject to interpretation, manipulation, and dispute.
Bridging the Gap: From Metric to Standard
To move forward, regulators and operators need to acknowledge that ARPU, in its current form, is no longer sufficient for serious economic analysis or policy-making. Here’s what the industry can do:
✅ 1. Standardize Definitions
Regulators should publish explicit guidelines on how ARPU must be calculated for reporting — including which revenues to include, how to treat inactive SIMs, and how to handle bundled services.
✅2. Require Reconciliations
Operators could be required to submit an IFRS-to-Regulatory ARPU reconciliation, similar to non-GAAP to GAAP disclosures in financial markets. This would improve trust without forcing either side to change their primary methodologies.
✅3. Introduce Better Metrics
Alternatives like Average Margin Per User (AMPU) or Revenue Per Account (RPA) may offer more meaningful insights — especially in markets where one household uses multiple SIMs, or services are increasingly bundled into family or enterprise plans.
✅ 4. Regulator-Operator Collaboration
Both parties should engage in structured dialogue, particularly in emerging markets, to align expectations on financial transparency, tax exposure, and pricing regulation.
Final Thought: Who Owns the Truth?
As telecoms shift from voice-and-data utilities to digital service providers, metrics like ARPU need to evolve. Investors deserve clarity. Regulators deserve consistency. And operators deserve fair evaluation.
But until ARPU is standardized, reconciled, and modernized, it will remain a battleground — not a benchmark.
📢What’s your view? Has ARPU lost its relevance? How are you handling IFRS vs regulatory expectations in your market?
Let’s open up the conversation.
