New Delhi [India], May 13 (ANI): The average revenue per user (ARPU) for Indian telecom operators is expected to rise 10-12 per cent in the current financial year 2025-26 as rural data consumption surges, according to Crisil Ratings.

Increasing internet adoption and data consumption by rural subscribers are emerging as structural drivers of growth in Indian telecom companies' average revenue per user (ARPU).

To capitalise on the trend, Crisil noted that telecom operators are strengthening rural connectivity, which should help expand their data subscriber base and returns.

Since December 2019, telecom tariffs have reportedly climbed at a 12-15 per cent CAGR through successive raises in 2019, 2021, and 2024. The latest telecom tariff hike was taken in July 2024.

Over the four calendar years ended December 31, 2024, internet penetration in rural India surged from 59 per cent to 78 per cent, outpacing urban areas, which grew from 77 per cent to 90 per cent.

Internet penetration in rural areas is expected to further increase by 4-5 per cent by the end of 2025-26, supported by continued adoption of online communication, digital payments as well as increasing usage of social media, content streaming services and e-commerce.

Despite being more price sensitive, the rural internet user base stayed resilient over the past year, even in the face of tariff hikes introduced in mid-2024, reflecting the high dependence of rural users on mobile internet, Crisil said.

This data consumption growth trend will be sustained with the expansion of the 4G networks in the underpenetrated areas. According to the rating agency, it will drive up the ARPU going forward.

Anand Kulkarni, Director, Crisil Ratings, said, 'The industry ARPU is expected to rise by Rs 20-25 to reach Rs 225-230 by the end of this fiscal, assuming tariffs remain stable.'

According to the rating agency, around 55-60 per cent of the incremental ARPU is expected to come from rural subscribers.

'Relatively lower internet penetration in rural regions will drive migration of subscribers to data plans. Additionally, uptrading of plans due to higher data consumption will also drive ARPU growth. Here as well, rural areas will play a key role as mobile phones serve as the primary gateway vis-a-vis metro users, who have alternatives such as wi-fi,' Anand Kulkarni.

However, Crisil Ratings argued that the affordability of data plans will remain essential for the growth in rural data subscribers. (ANI)