Telecom ARPU Doubles to 193 in 5 Years, Driven by Tariff Hikes

CIOTechOutlook Team | Thursday, 26 December 2024, 02:33 IST

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The telecom sector's average revenue per unit (ARPU) has nearly increased from Rs 98 in September 2019 to Rs 193 in September 2024, spurred by price raises. Nonetheless, due to significant tariff increases, the industry’s subscriber count at 1.15 trillion in September 2024 is below the September 2019 figures (1.17 trillion). Among telecom companies, Bharti Airtel has benefited the most from tariff increases, achieving a 2.2-fold rise in implied ARPU and a 17 percent CAGR over five years.

According to a new report, India’s telecom sector saw an 8 per cent rise (quarter-on-quarter) in revenue to Rs 674 billion (13 per cent increase year-on-year) in the second quarter of FY25, primarily due to tariff increases.

Fueled by three instances of smartphone tariff increases, India's quarterly telecom earnings have nearly doubled (increased by 96 percent) since September 2019, suggesting a 14 percent five-year compound annual growth rate for the industry, as reported by Motilal Oswal Financial Services Ltd.

Considering the combined market framework in the Indian telecom sector, increased data usage, decreased ARPU, and insufficient profits produced by telecom companies, “we expect tariff hikes to be more frequent. We build in 15 per cent tariff hike in December 2025.”

“We believe the significant improvement in the data subs proportion has also been a key driver for Bharti’s industry-leading ARPU,” said the report.

During the reporting timeframe from 2019 to 2024, Bharti's revenue has risen 2.6 times, indicating a five-year revenue CAGR of 21 percent, with the growth in revenue market share considerably higher at 48 percent.

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