Telcos to Pare Their Debt:

• ARPU should dial up to decadal high of Rs 225-230
• New spectrum capex to reduce as spectrum purchase completed in fiscal 2023
• Moderation in capex, healthy profitability will enable telcos to pare their debt

New Delhi: As the data usage surges in India amid tariff hikes, the average revenue per user (ARPU) per month will increase by 25 per cent to Rs 225 in the next fiscal (FY26), a report showed on Tuesday.

The industry ARPU should dial up to a decadal high of Rs 225-230 by the end of next fiscal compared with Rs 182 last fiscal (FY24), according to a Crisil Ratings report.

“This increase will have two distinct levers -- one, the recent tariff hikes of 17-19 per cent by telcos and, two, organic growth in data usage amid increasing 5G penetration,” said Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings.

“Customers have been uptrading their plans because of rising content consumption via video streaming, social media and online gaming resulting in higher ARPUs,” he added.

According to the report, the ARPU growth will be gradual over this fiscal and the next as the tariff hike becomes effective on the next recharge cycle for long-duration plans.

Similarly, the 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.

This was visible in the recent auction held in June 2024 which saw bids for only Rs 11,341 crore, or 12 per cent of the total airwaves on offer. Nearly half of the amount spent was on spectrum renewals.

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