India's telecom ARPU to grow 7% CAGR through FY29; narrowing tariff gap with global markets: Report

Noting that the industry consolidation is largely complete and tariffs are still among the lowest globally", the report noted, "The sector is well-positioned for stronger cash flows, faster deleveraging, earnings upgrades, and improved returns."

India's telecom sector is in a multi-year recovery, driven by ARPU improvement, structural data demand, and lower incremental capex. This creates a favorable backdrop for earnings upgrade, deleveraging and higher free cash flow conversion.

According to the report, India's telecom sector is driving a data consumption boom supported by affordable tariffs, widespread smartphone adoption, and expanding network coverage across rural India.

"We model an ARPU CAGR of 7% during FY26-29E, which should reduce India's tariff gap with global markets and restore attractive returns on invested capital," it said.

According to the report, India's per-user monthly data consumption increased from ~15x to ~21GB during CY16-24. According to Elara, the next phase of data growth will be more sustained, fueled by higher digital engagement, the adoption of data-intensive applications such as video, cloud gaming, enterprise SaaS, and IoT, and deeper digital integration across consumer and business segments.

"We see a credible path for per-subscriber use to exceed 65GB per subscriber in the next decade from ~21GB in CY24," it said.

According to Elara, the telecom sector is well-positioned to raise ARPU, which is projected to grow at a 7 per cent CAGR between FY26 and FY29. "We expect ARPU CAGR to accelerate to 7% during FY26-29E," the report said.

This shift is expected to be supported by tariff hikes, abundant bundled service offerings, elevated data use being a staple behavior and disciplined pricing.

"We expect blended ARPU to increase to 6 per cent in FY27E, 8 per cent in FY28E, and 6 per cent in FY29E, driven by tariff resets and higher average consumption," the report added. (ANI)