According to a research note by Credit Rating Information Services of India Limited (CRISIL), the recent tariff hikes in the range of 17-19 per cent by Indian telecom operators and the organic growth in data usage amid growing 5G penetration are likely to boost the industry average revenue per user (ARPU) to a decadal-high of Rs 225-230 in the fiscal year 2025-26 (FY26), compared to Rs 182 in FY24.
It added that along with moderation in the capital expenditure (capex), on account of lower network investments after the completion of fifth-generation network roll-outs and limited spectrum renewals will enhance the return on capital employed (ROCE) and support deleveraging in the industry which, in turn, will improve credit profiles.
CRISIL expects the ARPU growth to be gradual over fiscal 2025 and the next as the tariff hike becomes effective on the next recharge cycle for long-duration plans. The capex intensity averaged at -28 per cent over the past three fiscals and is expected to come down to -19 per cent by next fiscal as most players have completed their 5G rollouts.
Similarly, the new spectrum capex is likely to reduce as most of the spectrum purchase was completed in fiscal 2023 and the next significant spectrum renewal will be due in 2030.
