According to Investment Information and Credit Rating Agency (ICRA), the telecom industry revenues are projected to grow steadily in financial year (FY) 2025, with operating income expected to rise 12 to 14 per cent to Rs 3.5 to 3.7 trillion, driven by tariff hikes implemented in July 2024,
As per the agency, these tariff revisions led to improved average revenue per user (ARPU), which, though still the lowest globally, is estimated to have increased from Rs 184 in FY24 to Rs 200 in FY25. Another hike anticipated by the end of FY26 could further raise ARPU to Rs 220.
The report highlighted that the increase in 4G/5G subscribers and higher data usage contributed to a rise in adjusted gross revenue (AGR), which reached Rs 656.73 billion in the December 2024 quarter, an 11 per cent year-on-year increase, primarily due to the 2024 tariff hikes.
ICRA noted that data subscriber growth has been strong due to cheaper smartphones and greater content availability. Broadband subscriber penetration hit 79 per cent by December 2024, and average monthly data usage per user rose to 21.52 GB.
It further mentioned that the industry profitability is projected to grow by 12 to 14 per cent in FY25 to surpass Rs 1.6 trillion, with a 10 to 12 per cent increase expected in FY26. Significant 5G capex incurred in FY24 and FY25 has likely peaked, with capital intensity expected to moderate. Estimated capex is around Rs 3 trillion over the next three to four years.
Challenges to 5G expansion include the absence of widespread retail use cases, high device costs, and low fiberisation, currently at 38 per cent of towers; and constraining ARPU growth. Moreover, total industry debt is expected to rise to Rs 6.6 trillion by March 31, 2025, due in part to deferred AGR liabilities and spectrum auction payments from FY22, FY23, and FY25. The debt-to-operating income ratio is projected to remain at 3.9 to 4 times, with interest coverage at 3.3 times, which is expected to improve in FY25.
