• The Indian telecom industry's revenue has surged, with Bharti Airtel leading and an 8% quarter-on-quarter increase.
• The average revenue per unit (ARPU) has nearly doubled, but the subscriber base has decreased due to tariff hikes.
• Bharti Airtel's revenue has increased 2.6 times, while Vodafone Idea's growth has been modest due to subscriber losses.
• India is preparing to play a larger role in global semiconductor value chains, indicating a dynamic future for the Indian telecom industry.

The Indian telecom industry has experienced a significant surge in revenue over the past five years, with Bharti Airtel emerging as the biggest gainer. The industry's revenue has seen an 8% quarter-on-quarter increase, reaching Rs 674 billion in the second quarter of FY25, marking a 13% year-on-year growth. This growth has been primarily driven by tariff hikes, as reported by Motilal Oswal Financial Services Ltd.

The report further highlights that the quarterly telecom revenue of India has nearly doubled, showing a 96% increase since September 2019. This implies a 14% five-year industry revenue CAGR. The tariff hikes have been instrumental in this growth, with three rounds of smartphone tariff hikes contributing significantly.

The Indian telecom industry, characterized by a consolidated market structure, higher data consumption, lower ARPU, and inadequate returns generated by telcos, is expected to witness more frequent tariff hikes. The report predicts a 15% tariff hike in December 2025.

ARPU Doubles, Subscriber Base Shrinks

The average revenue per unit (ARPU) of the telecom industry has also seen a significant increase, almost doubling from Rs 98 in September 2019 to Rs 193 in September 2024. This increase has been driven by the tariff hikes. However, the sharp tariff hikes have led to a decrease in the industry's subscriber base, which stood at 1.15 trillion in September 2024, lower than the 1.17 trillion in September 2019.

Bharti Airtel has been the biggest beneficiary of these tariff hikes, with a 2.2 times increase in implied ARPU, registering a 17% five-year CAGR. The report attributes the significant improvement in the data subs proportion as a key driver for Bharti's industry-leading ARPU.

Over the reporting period from 2019-2024, Bharti's revenue has increased 2.6 times, implying a 21% five-year revenue CAGR. The incremental revenue market share of Bharti has been significantly higher at 48%.

Vodafone Idea's Fundraising Plans and India's Semiconductor Ambitions

On the other hand, Vodafone Idea lagged behind as subscriber losses offset a 7% ARPU growth, resulting in a modest 5% QoQ revenue increase to INR97b. The telecom operator has scheduled a meeting of its board of directors to consider raising funds not exceeding Rs 2,000 crore. The parent company, Vodafone PLC, is offloading its entire 3% remaining stake in Indus Towers.

In the context of India's readiness to assume a greater role in global semiconductor value chains, India and the United States announced the joint initiative on Critical and Emerging Technology (iCET) on May 24, 2022. The initiative committed the two countries to expand strategic technology partnerships and defense industrial cooperation between their nations' businesses, academic institutions, and government agencies.

As part of the inaugural meeting of the iCET in January 2023, the Semiconductor Industry Association (SIA) in the United States and the India Electronics and Semiconductor Association (IESA), agreed to develop a "readiness assessment" to identify near-term industry opportunities, facilitate the longer-term strategic development of their complementary semiconductor ecosystems, and make recommendations to the U.S. Department of Commerce and the Government of India Semiconductor Mission (ISM).