The operational profit for Indian telecoms will likely increase by up to 15% to Rs 1.2 lakh billion in FY24. According to Crisil Ratings, the participants had generated an operational profit of Rs 1.04 lakh crore in the preceding quarter.

 

The main driver of the FY24 profit increase in an industry that has faced significant challenges in the previous few years with the debut of the well-funded Reliance Jio will be the need for larger data packs amid rising usage. As telcos concentrate on converting 4G users to 5G services, the average revenue per user (ARPU), which has been on a downward trend for the previous few years, would increase by 8–10% to Rs 190 despite no widespread fee rise being envisaged in the near future, according to its deputy chief ratings officer Manish Gupta.

 

"Growth would be driven by rise in data usage to 23-25 GB per subscriber per month this fiscal from 20 GB last fiscal, and recalibration of tariff plans, leading to higher operating profitability," Gupta said.

 

The industry has a strong operating leverage since about three-fourths of the entire cost are fixed, and any increase in ARPU immediately affects operating profit. The operational profit nearly quadrupled between FY20 and FY23, while ARPU increased 1.4 times, it was stated.

 

The 4G technology will continue to predominate for some time. It also said that the slow monetisation of 5G services is probable since it depends on changing use cases and a rise in the country's low 5G phone penetration.