No major tariff hike, but telecom companies' revenue up 7.2% in Q1

Jefferies says sector will maintain 15% CAGR till FY26

Adjusted gross revenue (AGR) in the telecom sector rose 7.2 per cent year-on-year (Y-o-Y) to Rs 61,400 crore in the first quarter (April-June) of financial year 2025 (Q1FY25), an impressive showing which surprised many analysts who point to the lack of a major tariff action by the telcos during the period.

On a sequential basis, growth stood at 0.7 per cent.

“We are impressed telcos were able to grow revenues at a healthy pace despite no major change in tariffs, and premiumisation playing out nicely,” an analyst note by ICICI Securities said.

ICICI Securities pointed out that calculated on an annualised basis, the FY25 industry AGR (including the National Long Distance service) may come in at Rs 2.45 trillion.

Sectoral revenues are expected to grow at a compounded annual growth rate (CAGR) of 15 per cent to $ 38 billion by FY26, up from $29 billion in FY24 with market share gains for Airtel and Jio, an analyst note released by Jefferies said.

In FY24, the sector had witnessed 8.24 per cent growth in AGR, reaching Rs 2.7 trillion, up from Rs 2.49 trillion in FY23, figures from the Telecom Regulatory Authority of India (TRAI) show.

During the latest quarter, annualised sector revenues continued to scale up to a new peak of $ 30 billion, but sector revenue growth moderated to 7 per cent Y-o-Y, Jeffries said.

“While average subscriber growth moderated slightly to 2 per cent Y-o-Y, slower growth in average revenue per user (ARPU) of 5 per cent Y-o-Y resulted in the moderation in revenue growth,” it added.

Airtel takes the lead

In terms of revenue market share (RMS), analysts said gains will remain tilted towards Airtel and Jio until Vodafone Idea (Vi) completes its network investments into 4G, and begins its 5G rollout.

RMS refers to the percentage of the total revenue or sales in the Indian market that a telco’s business makes up, and is considered an important metric.

Including NLD, Jio had 42.7 per cent RMS in Q1FY25, followed by Airtel’s 38.3 per cent and Vi's 15 per cent, ICICI Securities said.

BSNL made up for the rest at 4 per cent.

But between the two leading telecom operators, the difference in growth has come down, trends suggest.

“Convergence in growth of Bharti and Jio is likely to keep pricing disciplined since tariff differential is not adding to growth differential,” Jefferies said.

While cautioning that Airtel’s circle-wise revenue is strictly not comparable as it has made some changes in revenue recognised under NLD/circle, thereby increasing circle revenues for Q1, ICICI Securities said Airtel saw higher growth in 16 of the 22 telecom circles in the country.

Jio is losing revenue market share to Airtel in Delhi, UP west, UP east, Himachal Pradesh, West Bengal, Bihar and Kolkata circles. Bulk of Airtel's market share gains in Q1 came from Delhi, Bihar and West Bengal.