ARPU Growth Driven by Tariff Hikes
Tariff hikes in 2019, 2021, and 2024 have significantly boosted the telecom sector’s ARPU, which climbed from ₹98 in 2019 to ₹193 by September 2024. Despite this growth, returns remain low relative to investment and rising data consumption.
Analysts from Motilal Oswal predict more frequent tariff increases in the coming years to enhance ARPU. A 15% hike is anticipated in December 2025, which could push Airtel’s ARPU past ₹300—a major milestone for the operator.
Telecom Sector Revenue on the Rise
In Q2 FY25, the telecom industry’s revenue grew by:
- 8% quarter-on-quarter (QoQ)
- 13% year-on-year (YoY)
This revenue increase, reaching ₹674 billion, is largely attributed to the recent tariff hikes. Analysts expect continued growth as the full impact of these hikes unfolds over the next two to three quarters.
Airtel Reaps the Maximum Benefit
Among India’s telecom operators, Bharti Airtel has been the biggest winner from tariff hikes. Over the past five years:
- Airtel’s ARPU grew by 2.2 times, reflecting a compound annual growth rate (CAGR) of 17%.
Airtel and Reliance Jio are expected to continue gaining market share, though the pace of gains may slow as Vodafone Idea (Vi) ramps up capital expenditure.
Looking Ahead: More Hikes, Stronger Revenues
The Indian telecom sector’s trajectory suggests that tariff hikes will remain a core strategy to drive ARPU and profitability. With a projected 15% hike in December 2025, operators aim to achieve sustainable returns while catering to the growing data demands of consumers.
As leading players consolidate their dominance, competition will focus on innovation and improving consumer experience—a vital aspect for maintaining growth in this fast-evolving industry.
