Telecom Operators Anticipate ARPU Growth in Q1 due to Premiumization Trend

Telecom operators in India are expected to see a sequential increase in Average Revenue Per User (ARPU) in Q1 FY26 due to the ongoing shift from 4G to 5G and higher service usage. Analysts predict a CAGR of 9.8% in industry Adjusted Gross Revenue over FY25-FY30. Jio is expected to see the fastest QoQ growth at 3%, followed by Bharti India mobile at 1.6%, while Vodafone Idea is expected to remain flat QoQ.

Telecom operators in India are expected to experience a sequential increase in Average Revenue Per User (ARPU) in the first quarter of financial year 2025-26 (Q1 FY26). This growth is primarily driven by the ongoing shift from 4G to 5G networks and an increase in service usage. Analysts predict a compound annual growth rate (CAGR) of 9.8% in industry Adjusted Gross Revenue (AGR) over the period FY25 to FY30 [2].

According to ICICI Securities, Reliance Jio is expected to see the fastest quarter-on-quarter (QoQ) growth at 3%, followed by Bharti Airtel India mobile at 1.6%. Vodafone Idea, however, is projected to remain flat QoQ, reflecting its ongoing financial challenges [3].

The shift to 5G technology is anticipated to drive significant revenue growth for telecom operators. 5G networks offer faster data speeds and lower latency, enabling new services such as augmented reality, virtual reality, and the Internet of Things (IoT). This technology is expected to attract more users and increase data usage, thereby boosting ARPU.

Additionally, the growing usage of mobile services, including voice and data, is contributing to the increase in ARPU. According to ICICI Securities, voice usage and data usage grew at a CAGR of 12.6% and 37% respectively between FY17 and FY25. The average subscriber now spends more than 3 hours daily on mobile, indicating a significant increase in service usage [2].

While Vodafone Idea faces mounting pressure due to its AGR dues, the government has signaled no further relief. The company has a major financial obligation of approximately Rs 18,000 crore due by the end of FY26, with cash reserves standing at only around Rs 9,930 crore as of March 2025 [3]. Despite these challenges, the government has stated that it is not keen on giving further relief in the form of relaxed or extended payment schedules.

Overall, the telecom sector in India is expected to see robust growth in ARPU in Q1 FY26, driven by the transition to 5G and increased service usage. However, the sector's future will also depend on how operators navigate their financial challenges and the regulatory environment.

References:
[1] https://economictimes.indiatimes.com/markets/stocks/news/defence-stocks-icici-securities-sees-over-15-revenue-growth-hal-bel-4-others-on-radar/articleshow/122293874.cms
[2] https://telecom.economictimes.indiatimes.com/news/industry/telcos-set-for-20-tariff-hike-in-fy27-icici-securities-reports/122309758
[3] https://www.financialexpress.com/business/industry-agr-clock-ticks-for-vi-govt-unlikely-to-ease-agr-dues-for-vodafone-idea-despite-financial-strain-3905569/