India's telecom sector is entering a growth phase with revenue expected to rise 12-14% in FY27 as operators focus on monetising their existing subscriber base, according to CareEdge Ratings report. The sector is expected to benefit from around 10% growth in average revenue per user (ARPU), supported by a likely tariff hike, continued premiumisation and the migration of users from 2G to 4G and 5G networks. As reported by Financial Express, the industry has significant headroom to improve monetisation, with mobile ARPU at around ₹200 despite India being among the world's largest markets for mobile data consumption.
Industry ARPU has already increased at a compound annual growth rate of 11%, rising from ₹142 in FY23 to ₹196 in FY26. According to CareEdge Ratings, the last industry-wide tariff increase took place in July 2024, with another hike expected in FY27, although expectations for its timing have shifted towards the end of the financial year. The ratings agency projects ARPU growth at 8-8.5% compound annual rate over the next three years, down from the 12-13% pace the sector delivered over the past five years. Average mobile data consumption reached 26.7 GB per user per month in March 2026, while the visitor location register (VLR) ratio rose to 93.7% in June 2026 from 92.85% in March 2025.
As India's wireless market approaches maturity, subscriber additions are expected to moderate to 3-4% annually, meaning subscriber growth will contribute less to overall industry expansion, making ARPU gains increasingly important for telecom companies. According to CareEdge Ratings, the industry has historically raised prices every 18 to 24 months, with the last major increase in July 2024, meaning the sector has now gone more than two years without a hike, longer than the usual cycle. UBS India's Navin Killa projects that telecom tariff increases over the next three years will come at a slower pace than markets are pricing in, citing a slightly more competitive market with a slightly better funded operator.
The completion of the peak 5G investment cycle is expected to further improve the sector's financial profile, with EBITDA margins projected to rise to 57% in FY27 from 55% in FY26, while capex intensity is expected to decline to 19% from 22%. According to CareEdge Ratings, the improvement in margins and lower capital spending are expected to strengthen free cash flow and support deleveraging. Net debt-to-EBITDA is forecast to fall to 2.3 times in FY27 from 3 times in FY26. This financial improvement comes as carriers have large-scale capex plans, with Reliance Industries Ltd announcing a landmark capital expenditure plan of ₹10 lakh crore over the next seven years.
Vodafone Idea is yet to make any changes to its tariff plans or raise headline tariffs, even though the carrier's non-executive chairman Kumar Mangalam Birla has reiterated the need for tariff corrections. Birla had said at the company's annual general meeting on August 27 that 'India's Arpu remains among the lowest globally, making periodic tariff rationalisation essential to ensure the industry's long-term sustainability and ability to earn reasonable returns on capital'. The industry's focus on monetisation comes as operators seek to bolster their return on investments ahead of a wave of capital spending, with HSBC expecting tariff hikes to take place in the January to March quarter of 2027.
