Telecom ARPUs to touch decade-high mark in FY26, says Crisil Ratings

Telecom companies are set to touch a decade-high average revenue per user (ARPU) mark of Rs 225 in the next fiscal, helped by recent tariff hikes, while improved return on capital invested (RoCE) will strengthen their credit profile, Crisil Ratings has said.

Tariff hike and growing data consumption will lift the ARPU of Indian telecom companies by approximately 25% in 2025-26 compared with 2023-24, the ratings firm said in a release on Tuesday.

“The industry ARPU should dial up to a decadal high of Rs 225-230 by end of the next fiscal compared with Rs 182 last fiscal,” Manish Gupta, senior director at Crisil Ratings, said.



“This increase will have two distinct levers – one, the recent tariff hikes of 17-19% by telcos and, two, organic growth in data usage amid increasing 5G penetration,” he said. “Customers have been uptrading their plans because of rising content consumption via video streaming, social media and online gaming, resulting in higher ARPUs.”

The rise in per-user revenue will improve telcos’ operating profitability, which shall lift the industry RoCE to around 11% in fiscal 2026 from around 7.5% in fiscal 2024, after a long period of suppressed RoCEs, Crisil Ratings said.

Further, the moderation in capital expenditure towards network expansion will reduce debt, increase profitability, and, consequently, shore up credit profiles, it said.

“The moderation in capex as well as healthy profitability will enable telcos to pare their debt to around Rs 5.6 lakh crore next fiscal from peak debt of around Rs 6.4 lakh crore in fiscal 2024,” said Anand Kulkarni, director at Crisil Ratings.


He said around half of the debt on telcos’ balance sheets is for spectrum purchase, which has a long repayment schedule.

“Debt reduction will help the industry to improve debt-to-Ebitda to less than three times next fiscal from around 4.3 in fiscal 2024. Resultantly, the credit risk profiles are expected to improve,” Kulkarni said.

Capex intensity averaged at around 28% of revenue over the past three fiscals and is expected to come down to around 19% by the next fiscal as the top two players – Reliance Jio and Bharti Airtel - have completed their 5G rollouts.

“While network capex for fiberisation of telecom towers, setting up of base transceiver stations and small cells for augmentation of networks, is expected to continue, it will be at a slower pace,” the Crisil research note said.

Similarly, new spectrum capex is also likely to reduce as most of the spectrum purchase was completed in fiscal 2023 and next significant spectrum renewal will be due in 2030, it added.