Indian Telecom Triumph: Profit and Growth Surge

Indian telecom companies are poised for a significant leap in operating profits, predicted to grow by 12-14% to approximately Rs 1.55 lakh crore, as indicated by a Monday report from Crisil Ratings. The anticipated increase is largely attributed to heightened data consumption and an upswing in the average revenue per user (ARPU).

The robust performance is complemented by a reduction in capital expenditure intensity following the rollout of 5G networks, which enhances free cash flow and strengthens credit profiles. Notably, Crisil Ratings' analysis underscores that for every Re 1 increase in ARPU, the industry's operating profit could rise by Rs 850-950 crore.

Surveying three major telcos with roughly 93% of the market share, the analysis reveals a rosy financial trajectory ahead, bolstered further by broader 5G adoption and premium service offerings. Despite no immediate tariff hikes forecasted for the fiscal, the strategic rebalancing of telecom plans is projected to propel ARPU, invigorate operating profits, and sustain credit strength.

(With inputs from agencies.)