Long road to ₹300 Arpu

With 5G yet to be monetised, expect many more increases in telecom tariffs

- SUBHAYAN CHAKRABORTY

On Friday, as Reliance Industries announced its financial results for the June quarter, its telecom business stood out for its double-digit growth both in revenue and net profit, beating the Street forecast. Reliance Jio also emerged as the biggest telecom data company.

But its Arpu, or monthly average revenue per user, which captures the financial health and promise of a telecom service provider (telco), remained flat at ₹181.7 for the fourth consecutive quarter. The telecom industry leader is now looking at improving Arpu over the next few quarters because of recent tariff increases.

The Jio scenario explains why the tariff hikes, led by the biggest player, have dialled in a new era in Indian telecom known for having the lowest tariffs in the world.

Upping the Arpu

Breaking a record 30-month logjam, India's telecom sector saw an industry-wide increase in tariffs earlier this month. In these 30 months, though there were minor tariff tweaks, no one had raised tariffs across the board. This time, the hikes are up to 25 per cent and touch a large chunk of both prepaid and postpaid plans, from the entry level top-ups to premium 5G data packs, setting a road map for an Arpu of ₹300 and beyond.

Bharti Enterprises Chairman Sunil Mittal, a long-time backer of higher Arpus, has maintained that India needs to cross the ₹300 Arpu figure and have an effective pricing mechanism to make the industry robust. Even at an Arpu of 300, India would remain the most affordable telecom market, industry watchers say. But, for now, analysts are looking at the short term. In a recent note, Crisil Ratings said the recent tariff hikes would boost the industry Arpu to a decadal high of ₹225-230 in 2025-26 (FY26), compared to ₹182 in FY24.