Definition of Revenue Generating Unit (RGU)

A revenue generating unit (RGU) is an individual service subscriber who generates recurring revenue for a company. This is used as a performance measure for management, analysts, and investors. RGUs are tracked by telecom companies, cable companies and other businesses that have a base of subscribers for a service. RGU growth can occur organically or through acquisitions.

Understanding Revenue Generating Unit (RGU)

Revenue generating units (RGUs) are subscribers — either individuals or businesses, but most commonly applied to individuals — who pay for monthly services such as mobile phone or cable. RGUs as a term is interchangeable with "customer relationships," "customers" or simply "subscribers." Whatever a company decides to name them, it compiles this data, segments, and analyzes. RGU figures are often used to calculate average revenue per user (ARPU), another key metric for the telecom and cable industries.

Example of RGU Data

Liberty Global Group is a good example of a company that breaks down RGU data. Its quarterly (10-Q) and annual (10-K) filings contain RGU tables that segment cable service type (voice, video, data), mobile service type (prepaid, postpaid), and by countries where the company operates. Net additions or losses of RGUs are then discussed in the company's MD&A, or management discussion and analysis.

Analyzing RGUs

A company is interested in net additions to RGUs. It will analyze where RGUs were added geographically and in which product lines. The company will attempt to attribute these gains in subscribers to a particular marketing campaign or change in the competitive landscape. Similarly, if there were RGU losses, it would try to determine the reasons and take steps to address the attrition.