New Delhi: According to Crisil Ratings, Indian telecom operators' average revenue per user (ARPU) is expected to increase by 10-12% in the current fiscal year 2025-26, owing to a surge in rural data usage.
Rural customers' increased internet usage and data consumption are emerging as structural drivers of growth in Indian telecom companies' average revenue per user (ARPU).
To capitalize on the trend, Crisil observed that telecom providers are improving rural connectivity, which should help expand their data subscriber base and revenues.
According to reports, telecom expenses have increased by 1215% since December 2019, owing to successive hikes in 2019, 2021, and 2024. The most recent telecom tariff increase occurred in July 2024.
Over the four calendar years ending December 31, 2024, internet penetration in rural India increased from 59% to 78%, outperforming urban regions, which expanded from 77% to 90%.
Internet penetration in rural regions is anticipated to rise by 45% by the end of 202526, thanks to continued adoption of online communication, digital payments, and increasing usage of social media, content streaming platforms, and e-commerce.
Despite being more price sensitive, the rural internet user base remained stable over the past year, even in the face of tariff increases imposed in mid-2024, indicating rural users' strong reliance on mobile internet, according to Crisil.
This data consumption increase trend will be continued with the expansion of 4G networks in underpenetrated regions. According to the rating organisation, this would raise the ARPU in the future.
According to Anand Kulkarni, Director of Crisil Ratings, the industry's ARPU is projected to increase by Rs 2025 to Rs 225230 by the end of this fiscal year, assuming rates remain steady.
According to the rating agency, rural customers will provide approximately 5560% of the increase in ARPU.
Relatively poor internet access in rural locations will encourage subscriber migration to data plans. Furthermore, ARPU will increase as a result of upselling programs to account for greater data usage. Here, too, rural regions will play an important role, with mobile phones serving as the principal gateway for metro consumers, who have other possibilities such as wifi, according to Anand Kulkarni.
However, Crisil Ratings believes that the affordability of data plans will continue to be critical for the expansion of rural data users.
