In an exciting forecast for the telecom sector, Crisil Ratings predicts that telecom firms are poised to experience a 10-12% growth in average user revenue by 2026. This promising increase is largely driven by a surge in internet adoption and data consumption in rural regions, which have outpaced urban areas over the past few years.
Rural Internet Penetration Surge
Recent trends reveal that rural sectors in India have witnessed a remarkable rise in internet access compared to their urban counterparts. Over the last four years, internet penetration in rural areas soared by 19%, significantly surpassing the 13% increase seen in urban zones. This shift underscores the expanding digital landscape in less populated regions.
- Rural internet growth: 19% increase
- Urban internet growth: 13% increase
Data Consumption on the Rise
A separate report from Nokia highlights a staggering 23% increase in total data usage, reaching 25.1 exabytes per month in 2024. Notably, non-metro and rural areas accounted for approximately 57% of this data consumption, showcasing their growing reliance on digital connectivity.
- Metro data traffic growth: 24%
- Rural data traffic growth: 24.5%
Focus on Rural Network Expansion
Major telecom operators in India, including Reliance Jio, Airtel, and Vodafone-Idea, are strategically directing their efforts towards enhancing internet access in rural locations. During the spectrum auction in June 2024, these companies successfully secured substantial spectrum allocations within the B and C telecom circles, which predominantly serve rural populations.
Investment in Telecom Infrastructure
Telecom tower companies are stepping up their game as well, planning significant investments to bolster capacity in rural regions. According to the Crisil Ratings report, an estimated ₹8000-9000 crore will be allocated specifically for rural infrastructure development during FY26.
Boosting Returns Through Strategic Investments
Mohini Chatterjee, a Team Leader at Crisil Ratings, emphasizes that with targeted investments in network expansion and spectrum acquisition, the telecom industry is on track to enhance their return on capital employed. Projections indicate a rise to about 12% in FY26, up from 10% in the previous fiscal year, driven by increased average user revenue.
This growth trajectory not only highlights the potential of rural markets but also sets the stage for a more connected India. As telecom companies adapt to changing patterns in data consumption, they are well-positioned to capitalize on the burgeoning demand for internet services in these underserved areas.
