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India's telecom industry revenue is expected to grow 12-14 per cent in FY27, supported by around 10 per cent growth in average revenue per user (ARPU), even as subscriber additions remain moderate, CareEdge Ratings said in a report.
The rating agency expects subscriber growth to remain at 3-4 per cent in FY27 as India's wireless market approaches maturity. With fewer new subscribers contributing to growth, operators are increasingly relying on higher revenue from their existing customer base. CareEdge expects another tariff revision in the second half of FY27, along with continued customer premiumization, to drive ARPU growth of around 10 per cent. It said the potential tariff increase comes nearly two years after the industry's last broad-based tariff hike in July 2024. While subscriber growth is expected to remain moderate at 3-4% in FY27 as market penetration approaches maturity, CareEdge Ratings expects industry revenue to grow by 12-14%, supported primarily by around 10% ARPU growth, said Maulesh Desai, Director, CareEdge Ratings. The report noted that industry ARPU has already increased at a compound annual growth rate of 11 per cent, from Rs 142 in FY23 to Rs 196 in FY26, despite the absence of an industry-wide tariff hike since July 2024. The report further said ARPU growth is being supported by the migration of users from 2G to 4G and 5G, premiumization through higher-value plans and bundled offerings, rising smartphone penetration, increasing data consumption and improving subscriber quality. Average mobile data usage reached 26.7 GB per user per month in March 2026, while India's mobile ARPU stood at USD 2.5, highlighting the gap between high data usage and monetisation, the report said. Another calibrated 10-12% tariff hike in the second half of FY27 could emerge as the key catalyst for the next leg of ARPU growth, profitability improvement and returns on the substantial capital invested in 5G infrastructure, the report added. The sector is also expected to benefit from easing capital expenditure after the peak 5G investment cycle. CareEdge expects capex intensity to decline to 19 per cent of revenue in FY27 from 22 per cent in FY26, while EBITDA margins are projected to improve to 57 per cent from 55 per cent. The improvement in operating performance is expected to strengthen cash generation and support deleveraging, with net debt-to-EBITDA projected to fall to 2.3 times in FY27 from 3 times in FY26. The sector is also moving beyond its peak investment cycle following the nationwide 5G rollout, said Prasanna Krishnan, Associate Director, CareEdge Ratings, adding that improving operating leverage is expected to strengthen cash generation and accelerate deleveraging. (ANI)
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