Nevertheless, telecom companies are projected to experience revenue growth this year. Average revenue per user (ARPU) is expected to rise by about 12%, even in the absence of an official price increase. This shift is mainly due to users transitioning from prepaid to postpaid plans and moving from feature phones to smartphones—both of which contribute to higher revenue.
If a price hike does occur next year, ARPU could potentially increase even further—possibly by 18–20%. However, Salgaonkar does not anticipate the substantial hikes seen previously. “The first tariff rise was 40%, the next was 25%, and the last one was 15%. Therefore, the upcoming one may be 15% or even less,” Salgaonkar explained.
Regarding the overall industry structure, Salgaonkar believes that a three-player market will prevail. “In most global markets, the third telecom company, even with smaller market share, continues to exist,” he stated, highlighting infrastructure and consumer behavior as critical factors. He further noted that the Indian government might prefer to avoid a duopoly due to possible strains on networks and digital services like Unified Payments Interface (UPI).
Also Read | Telecom minister states that satellite internet services will complement telcos’ offerings
From the perspective of tower companies, growth is likely to remain sluggish. According to Salgaonkar, India’s tower companies are trading at significantly lower multiples than their global counterparts due to three main reasons: limited tenancy growth, ownership structures where the largest customer is also the largest shareholder, and the conclusion of the 5G capex cycle. With 6G still years away and small cells managed by telcos instead of tower firms, future growth may be constrained.
Salgaonkar also shared insights on the competitive landscape in quick commerce, suggesting that fierce competition is expected to subside within a year. “What started as a three-platform market has expanded to seven,” he noted, referring to discount wars among new entrants. He anticipates that consolidation is likely as publicly listed companies concentrate on returns and pinpoint lucrative markets.
Also Read | Axis Capital predicts 8-10% growth in telecom revenue per customer over the next three years
In the travel industry, increasing incomes and evolving habits are driving steady demand. Indian consumers are traveling more, supported by low-cost carriers and simplified visa processes. Salgaonkar remarked, “What an Indian family did before COVID was one trip a year. Now it has increased to two and a half.” Online travel platforms are also noting that some Gen Z and millennial travelers are taking up to six or seven trips annually.
Despite concerns about a broader consumption slowdown, the travel sector remains strong. Drawing on the Chinese experience, where travel held up during an economic downturn, BofA Securities anticipates that this trend will persist in India for the next five to six years.
For the full interview, watch the accompanying video
Catch all the latest updates from the stock market here
