India's Telecom Revenue Surge Anticipated in FY27 Amidst ARPU Growth

India's telecom industry is forecasted to grow by 12-14% in FY27, driven by 10% ARPU growth, despite moderate subscriber additions. A tariff revision is expected, further boosting revenues. The sector anticipates improved cash flow and reduced capex intensity as 5G investments peak, enhancing profitability and deleveraging.

The Indian telecom industry is poised for a substantial revenue increase of 12-14% in FY27, backed by an anticipated 10% growth in average revenue per user (ARPU), as projected by CareEdge Ratings. While the addition of new subscribers is expected to be moderate, the wireless market edges towards maturity, minimizing the impact on growth.

According to the report, a new tariff revision in the latter half of FY27, coupled with continued customer premiumization, is predicted to propel ARPU growth by roughly 10%. The proposed tariff increase follows two years after the industry's last widespread hike in July 2024, said CareEdge Director Maulesh Desai.

The report highlights that ARPU has already seen an 11% compound annual growth rate, increasing from Rs 142 in FY23 to Rs 196 in FY26, largely due to users migrating from 2G to advanced 4G and 5G networks, and the rise in high-value plans and bundled offerings.

Mobile data usage surged to 26.7 GB per user monthly by March 2026, reflecting a disparity between high data consumption and its monetization, emphasized the report. Another strategic 10-12% tariff hike in FY27's second half could propel further ARPU increases, boost profitability, and enhance returns on the significant 5G infrastructure investments.

The sector also expects a respite from heavy capital expenditure as the peak 5G investment phase concludes. CareEdge anticipates a reduction in capex intensity to 19% of revenue in FY27, down from 22% in FY26, with EBITDA margins improving to 57% from 55%, fostering cash flow and aiding debt reduction.

“Moving beyond the peak investment phase following the comprehensive 5G rollout, the industry aims to leverage improved operating margins to bolster cash flows and accelerate debt reduction,” said Prasanna Krishnan, Associate Director at CareEdge Ratings.