Telecom Revenue Per User May Grow First Time In Decade By 2026: CRISIL

New Delhi, Jul 16 (KNN) Recent tariff hikes and increased data usage are expected to significantly boost the Indian telecom industry's average revenue per user (ARPU) to a ten-year high of Rs 225-230 by fiscal 2026, according to a research note released by CRISIL Ratings on Tuesday.

This represents a substantial increase from the Rs 182 ARPU recorded in fiscal 2024.

The credit rating agency projects a 25 per cent growth in ARPU over the next two fiscal years, driven by two key factors including the recent 17-19 per cent tariff increases implemented by telecom operators and the organic growth in data consumption, particularly with the expanding 5G network penetration.

Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, noted that changing consumer behaviour, including increased content consumption through video streaming, social media, and online gaming, has led to customers opting for higher-value plans.

The report suggests that the ARPU growth will likely be gradual over fiscal years 2025 and 2026, as the tariff hikes take effect on long-duration plan renewals.

This growth is expected to improve operating profitability and increase the industry's return on capital employed (RoCE) to approximately 11 per cent in the next fiscal year, up from 7.5 per cent in fiscal 2024.

CRISIL also anticipates a moderation in capital expenditure (capex) intensity, projecting a decrease from an average of 28 per cent over the past three fiscal years to about 19 per cent by the next fiscal year.

This reduction is attributed to the completion of 5G network rollouts and limited upcoming spectrum renewals.

The industry's debt levels are expected to decrease from a peak of Rs 6.4 lakh crore in fiscal 2024 to approximately Rs 5.6 lakh crore in the next fiscal year.

Anand Kulkarni, Director, CRISIL Ratings, stated that this debt reduction, coupled with improved profitability, is likely to enhance the credit risk profiles of telecom companies.

It is worth noting that the recent tariff increases, ranging from 11-25 per cent, implemented by private telecom carriers Reliance Jio, Bharti Airtel, and Vodafone Idea, have faced criticism from opposition parties, labour unions, and other stakeholders.

As the Indian telecom industry navigates these changes, the long-term impact on consumers and the broader economy remains to be seen. Industry observers will be closely monitoring how these developments affect market dynamics and consumer behaviour in the coming years.

(KNN Bureau)