{"id":17657,"date":"2023-08-16T15:02:54","date_gmt":"2023-08-16T19:02:54","guid":{"rendered":"http:\/\/mhgoldberg.com\/blog\/?p=17657"},"modified":"2023-08-16T15:51:01","modified_gmt":"2023-08-16T19:51:01","slug":"arpu-doesnt-measure-price","status":"publish","type":"post","link":"https:\/\/mhgoldberg.com\/blog\/?p=17657","title":{"rendered":"ARPU doesn’t measure price"},"content":{"rendered":"

ARPU (average revenue per unit) is an important metric used by financial analysts to compare service providers. It is a good proxy for the average size of a bill, but it is not an effective way to compare prices, or to track pricing trends.<\/p>\n

For certain, the prices of services impact your monthly bill, but there are many factors at play when looking at ARPU as a key performance indicator. Earlier this week, in RBC’s Q2\/23 Review of Canadian Telecommunications Services, we read “While we believe Canadian telecom stocks\/valuations continue to be sensitive to quarterly wireless ARPU growth, we continue to believe wireless ARPU as a KPI has major limitations and therefore must be sized up alongside other wireless KPIs (i.e., subscriber growth, churn, network revenue growth, margins, lifetime value per subscriber).”<\/p>\n

RBC noted the evolution of wireless ARPU definitions over the past decade, including shifts driven by IFRS accounting standards (as I described the last time I wrote about ARPU and prices<\/a>). The definition of the denominator units, the “U” of “ARPU”, has evolved from wireless subscribers to mobile phone subscribers, to now exclude tablets, hot spots and wireless home phone connections.<\/p>\n

\"\"For the past two months, the cellular component of Statistics Canada’s Consumer Price Index has reflected dramatic decreases in prices, approaching a 15% drop year-over-year. These results aren’t really a surprise to those of us who watch the industry and have seen a nearly continuous stream of lower prices, triggered in part by Quebecor’s absorption of Freedom Mobile, and in part the integration of Shaw with Rogers. <\/p>\n

All industry participants have significantly lower priced plans available now than a year ago. Statistics Canada says mobile prices in July 2023 were 14.8% lower than July of 2022.<\/p>\n

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BREAKING: New @Statcan_eng<\/a> data shows Canadian telecom service prices continue to fall & have been a main contributor against further inflation<\/p>\n

As per the data:
-Cellular prices were down 14.8% year-over-year in July
-Prices for internet access were down 3.8% year-over-year<\/p>\n

1\/2 pic.twitter.com\/aj8fJGLxWN<\/a><\/p>\n

— Canadian Telecommunications Association (@CanadaTelecoms) August 15, 2023<\/a><\/p><\/blockquote>\n