The telecom companies will see a 10 to 12 percent increase in their average user revenue in the financial year 2026, says a report by Crisil Ratings. The increase in revenue is backed by the strong internet adoption and data usage in the rural areas.
In the past 4 years, rural areas in India have seen a higher internet penetration rate than urban areas. The report says that while urban internet penetration increased 13 percent, the rural areas clocked a higher, 19% increase.
Anand Kulkarni, Director, Crisil Ratings, says that the “telecom industry’s average revenue per user is expected to rise by Rs 20 – 25 by the end of this fiscal year if the tariffs remain stable.”
Higher data consumption in rural India
According to a report by Nokia, total data consumption increased by 23 percent in 2024 to 25.1 exabytes per month (1 EB = 1 million TB). The non-metro cities and rural areas had a share of about 57 percent of the total data consumption.
Telecom circles B and C, which cover about 70 percent of the rural region in India, are seeing a higher data consumption growth rate in comparison to the urban areas. The Nokia report shows that while data traffic grew by 24 percent in the metro cities, it registered a growth rate of 24.5 percent in the predominantly rural circles.
Network expansion in rural areas
The three major telecom companies in India, Reliance Jio, Airtel, and Vodafone-Idea, have also focused on the increasing internet usage in rural areas. In the spectrum auction in June 2024, the telecom companies acquired a significant spectrum in the telecom circles B and C.
Telecom towers boosting capacity in rural India
Additionally, the telecom tower companies are also increasing their capacity in the rural areas with a heavy investment planned in the FY26. The Crisil Rating report indicates that a significant chunk of the planned Rs 8000-9000 crore investment by the telecom tower companies will be invested in the rural regions.
Mohini Chatterjee, Team Leader, Crisil Ratings, added that the targeted network and spectrum investments in rural areas, along with growth in average user revenue, will help increase return on capital employed for telecom companies “ to about 12 percent in FY26 from about 10 percent in FY25.”