Premiumisation to drive Arpu growth for all telecom operators in Q1

Analysts expect a sequential increase in Arpu for all telecom operators in Q1 FY26, driven by the ongoing shift from 4G to 5G and higher service usage

Telecom industry, telecom sector — ICICI Securities expects industry Adjusted Gross Revenue (AGR) to rise by a CAGR of 9.8 percent over FY25-FY30.

2 min read Last Updated : Jul 09 2025 | 10:27 AM IST

Analysts expect a sequential uptick in Average Revenue Per User (Arpu) in the first quarter (Apr-Jun) of FY26 for all telecom operators.

All three telcos are likely to continue benefiting from the ongoing trend of premiumization, where the shift from 4G to 5G remains strong, along with higher service usage by customers, according to a note by Axis Capital. “Overall, Jio will see the fastest quarter-on-quarter (QoQ) growth, at 3 per cent, followed by Bharti India mobile at 1.6 per cent, while Vodafone Idea is expected to remain flat QoQ,” the note stated.

Referring to the premiumization shift, Centrum Institutional Research noted that the three private sector telecom operators are expected to report a 2 per cent quarter-on-quarter increase in Arpu.

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“Telcos are enjoying higher pricing power as usage of services has grown exponentially—minutes/data usage has a compounded annual growth rate (CAGR) of 12.6 per cent/37 per cent over FY17–25. The average time subscribers spend per day on mobile is over 3 hours,” said ICICI Securities in its note. Historically, pricing power was hindered by the rise in competitive intensity from new entrants.

ICICI Securities expects industry Adjusted Gross Revenue (AGR) to rise by a CAGR of 9.8 per cent over FY25-FY30, while telecom operators’ market shares are likely to remain broadly stable. Subscription numbers are set to grow at 2 per cent per annum, it added.

The report also forecasts one large tariff hike in FY27, factoring in a 20 per cent hike across categories. “Thereafter, we have not factored in any major change in tariffs,” it said. Other analysts expect the next round of tariff hikes to occur at the end of FY26 or FY27. The pricing environment has become more favourable, with only three private and one public sector telecom operator, which was evident in the July 2024 tariff hike by all three leading telcos, a note by Centrum pointed out. “We expect another 12-15 per cent tariff hike by the end of FY26,” it concluded.