New Delhi, Sep 10 (IANS) A tariff hike is likely in India’s telecom sector, alongside continued premiumisation, to support 10 per cent ARPU growth and 12-14 per cent revenue growth in FY27, even as subscriber additions remain moderate, a report said on Thursday.
The report from CareEdge Ratings forecasted EBITDA margins to improve from 55 per cent in FY26 to 57 per cent in FY27, and capex intensity to moderate to 19 per cent from 22 per cent.
“India’s telecom market continues to exhibit one of the widest gaps between data consumption and monetisation. Despite having among the world’s highest mobile data usage levels, mobile ARPU remains at only $2.5, highlighting significant headroom for further tariff rationalisation,” the report said.
The firm said that nearly two years have elapsed since the last industry-wide tariff hike, and hence another calibrated increase appears likely in FY27.
The completion of the peak 5G investment cycle should drive a structural improvement in the sector’s financial profile.
Collectively, these factors should support stronger free cash flow generation and deleveraging, with net debt-to-EBITDA declining from 3-fold in FY26 to 2.3-fold in FY27.
“India’s telecom sector has entered a fundamentally different growth phase, with earnings increasingly driven by ARPU-led monetisation of the existing subscriber base rather than subscriber additions,” said Maulesh Desai, Director, CareEdge Ratings.
The continued rise in ARPU, despite no tariff hike since July 2024, highlighted the strength of ongoing premiumisation, 2G-to-4G/5G migration, rising smartphone penetration, and improving subscriber quality.
“India’s monthly data consumption of 26.7 GB per user is among the highest globally, while its ARPU of $2.5 remains significantly lower than that of other major telecom markets. This combination underscores significant headroom for further tariff rationalisation, making another calibrated tariff hike in FY27 a key catalyst for the next phase of growth,” the report noted.
As India’s wireless market approaches maturity, telecom subscriber growth is moderating to 3-4 per cent per annum, reducing the contribution of subscriber additions to industry growth and shifting the focus towards ARPU-led monetisation of the existing subscriber base, the firm said.
–IANS
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