Telecom, tech companies will inevitably twin to beat low ARPU – Red Hat Tech Chief
tech companies — or telco to a techco — is inevitable and is being driven by an existential crisis stemming from lower average revenue per user (ARPU), increasing capital expenditure and evolving consumer needs, said a top executive of US-based open-source solutions provider, Red Hat.
“It’s a universal trend. It’s not necessarily India, but in India, there are probably a few more levels.
The telco to techco transformation has to happen. It’s not an if, but when.
It is almost an existential crisis,” Red Hat Chief Technologies Azhar Sayeed told ET.
He added that the cost dynamics stemming from lower ARPU levels are driving the need to transform and add more value to services being offered to consumers. “The ARPU here is $6-7, something like that, while the ARPU in the US is $35.
There’s no comparison — despite the volume of subscribers here — in the context of infrastructure you need to line up to deliver that kind of service,” Sayeed said.
Telecom operators such as Bharti Airtel and Vodafone Idea have been calling for tariff hikes, claiming that India is at the bottom in terms of both ARPU and cost per gigabyte (GB) of data.
Sayeed said improvement in cost dynamics will not come from providing connectivity alone. “Unless they move up the value chain, unless they figure out how to automate an operator infrastructure, and be more efficient, nimble, and flexible, they cannot survive in this cost structure.
