In the telecoms industry you will hear the abbreviation ARPU on a regular basis. It stands for Average Revenue Per User and is a measurement made by the networks to better understand the value of their business mobile contracts. The higher the ARPU the more valuable the customer.

It is calculated by taking the total revenue (both from customer spend and incoming call connection fees) and dividing it by the number of users. So a business with 10 mobile phones earning £500 per month for the network would have an ARPU of £50.

Higher ARPU generally comes from high usage, extra services and out-of-bundle spend. So companies with data bolt-ons and regular roaming will generally have a higher ARPU than those on similar tariffs who never use more than their allowances.

Why is ARPU important?

When your contract is due for upgrade the network will look at the ARPU and decide on how much they can put towards the deal. Your business mobile dealer will then use this figure to calculate which phones are available for you or how much can be given to you in kit allowance.

You will usually see reference to ARPU and other key business metrics when networks disclose their profit figures. The value of these metrics can be used as a comparison between companies and between operating years. 

With decreasing voice revenues mobile companies are focusing on data to drive ARPU higher. Generating extra revenue (higher ARPU) from existing customers is seen as more cost effective than increasing revenue through new customer acquisition.