India's telecom ARPU to grow 7% CAGR through FY29; narrowing tariff gap with global markets: Report
New Delhi, June 16
India's telecom sector is entering a multi-year growth and recovery phase with ARPU CAGR expected to grow to 7% during FY26-29E, which will likely reduce India's tariff gap, as per a report by Elara Capital.
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
Reader Comments
Honestly, Indian telecom tariffs are ridiculously cheap compared to even Southeast Asian countries. ₹200-300 for 2GB/day is a steal. The quality needs to improve though—call drops in Bangalore are still frustrating. But I'm okay with moderate hikes if it means better 5G coverage and fewer ads. 😊
Coming from the US, I'm amazed at how cheap Indian mobile data is. Back home, a 10GB plan costs $50-60. India's ARPU is still under $3? That's insane growth potential. The report makes sense—Indian operators need to eventually price data to recover infrastructure costs and earn decent returns. 💵
65GB per subscriber in a decade? That's a lot of reels and OTT! YouTube and Netflix in 4K are already data hogs. But I'm a bit skeptical—affordable tariffs have democratized access, but can the infrastructure keep up? Rural areas still get patchy 4G. Hope they invest in fiber and towers before hiking prices. 🏞️
Finally, some good news for telecom stocks! As an investor, I've been waiting for this. A consolidated market with just 3 players should stabilize pricing. But ethically, I hope Jio and Airtel don't go overboard with tariff hikes. There's a fine line between fair returns and exploiting a captive audience. 📈⚖️
"Tariffs still among lowest globally" — that's exactly why India is a digital powerhouse. Every rickshaw driver uses UPI and streams music. Don't kill the golden goose with aggressive
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