India’s telecom industry is set for strong financial performance this fiscal, with operating profit (Ebitdar) expected to rise 12-14 percent to about ₹1.55 lakh crore. The growth will be fuelled by surging data consumption and higher average revenue per user (ARPU), which is projected to climb to ₹220-225 from ₹205 last year, CRISIL said in its report.
Wider 5G availability, with penetration forecast to reach 45-47 percent by March 2026 from ~35 percent in March 2025, is driving demand for social media, video streaming, gaming, generative AI, and digital marketing. Data usage is projected to rise to 31-32 GB per user per month this year compared to ~27 GB last year.
Telcos are also rebalancing plans by offering 5G only on higher data packs, nudging consumers toward premium plans and boosting ARPU. The introduction of bundled premium plans with OTT services, along with rising rural and semi-urban internet penetration to 82 percent by 2026, is expected to further support revenue growth.
Higher ARPU directly translates into stronger profitability due to the industry’s high operating leverage, where every ₹1 increase in ARPU adds ₹850-950 crore to Ebitdar. At the same time, lower capital expenditure intensity is improving free cash flow.
With most 5G rollout completed and spectrum purchases largely done, capex intensity is expected to moderate to 24-26 percent this fiscal from ~31 percent in recent years. This will generate healthy free cash flow of around ₹70,000 crore, which telcos are likely to use for debt reduction.
Consequently, industry net leverage is expected to decline to ~2.7 times this fiscal from 3.4 times in FY25, strengthening the credit profiles of leading operators. Overall, the combination of rising data usage, premiumization of plans, and easing investment needs positions Indian telecom operators for robust and sustainable growth.
TelecomLead.com News Desk
