According to a report by Elara Capital, India’s telecom sector is entering a multi-year growth and recovery phase, supported by rising average revenue per user (ARPU), sustained data demand and lower incremental capital expenditure requirements.
The brokerage expects industry ARPU to grow at a compound annual growth rate (CAGR) of 7 per cent between financial year 2025-26 (FY26) and FY29, helping narrow India’s tariff gap with global markets. It noted that industry consolidation is largely complete and telecom tariffs in India remain among the lowest in the world.
As per the report, the sector is well positioned for earnings upgrades, deleveraging and stronger free cash flow generation as operators benefit from improving monetisation trends.
The report further highlighted that India’s telecom market continues to witness a data consumption boom driven by affordable tariffs, increasing smartphone penetration and expanding network coverage across rural areas.
The report noted that monthly data consumption per user increased from around 15 GB to 21 GB between 2016 and 2024. Looking ahead, it expects the next phase of growth to be more sustainable, supported by deeper digital engagement and the increasing adoption of data-intensive applications such as video streaming, cloud gaming, enterprise software-as-a-service platforms and internet of things services.
According to Elara, ARPU growth over the next few years will be driven by tariff hikes, bundled service offerings, rising data consumption and disciplined pricing strategies adopted by telecom operators.
