Telecom sector focus: Telcos’ ARPU to grow at 11-12% CAGR in next 3-4 years – Here’s how and why its necessary

With the three major telecom operators in India – Reliance Jio, Bharti Airtel and Vodafone Idea (Vi) – taking a tariff hike of up to 25 per cent in July 2024 with a possibility of another hike this year by 10 per cent, JM Financial said, telcos’ ARPU is expected to grow at 11-12 per cent CAGR in the next 3-4 years. Given the consolidated industry structure and Jio’s need for higher ARPU to justify its significant 5G capex and also given its potential listing plans, the segment is expected to achieve an ARPU of Rs 280-310 in the next 3-4 years (via tariff hikes, MBB upgrades, post-paid additions and data monetisation) for a pre-tax RoCE of 12-15 per cent, the brokerage firm said.