Indian Telcos Should Stop Providing Free Unlimited 5G-Backed Offerings: Analysts

Why It Matters

Ending free unlimited 5G plans could unlock significant revenue for Indian operators and improve ARPU growth, while aligning pricing with global best practices.

Key Takeaways

• Jio, Airtel, Vi offer free unlimited 5G on prepaid packs starting $2.4.
• Data usage grew 29% YoY in FY26, avg 34.1 GB per subscriber.
• Analysts urge telcos to end free unlimited 5G and revamp pricing.
• ARPU rose 8.5% to $2.59, but Jio’s growth slowed to 7%.
• 5G penetration hit 40.3%, about 434 million Indian users.

Pulse Analysis

The Indian telecom sector is at a crossroads as 5G coverage expands to more than 40% of the population, translating into roughly 434 million subscribers. While the rollout has spurred a surge in data consumption, the prevailing strategy of offering free unlimited 5G on low‑cost prepaid bundles—starting at about ₹198 ($2.4)—has constrained operators’ ability to capture value. Analysts at Motilal Oswal contend that the existing tariff architecture, which caps revenue per gigabyte, is fundamentally misaligned with the cost structure of modern networks.

Recent figures show combined data traffic for the three private carriers rising 29% year‑on‑year in FY26, with average monthly usage climbing to 34.1 GB per user. This consumption boom lifted the blended ARPU to ₹215 ($2.59), yet Reliance Jio’s ARPU growth lagged at 7% compared with Airtel’s 9.5% and Vi’s 8%. The disparity underscores how unlimited plans dilute per‑gigabyte earnings, especially as fixed‑line fibre and fixed‑wireless access (FWA) further accelerate data demand. Monetising this usage is now a strategic imperative.

To convert higher data volumes into profit, telcos must redesign pricing tiers, introduce tiered data caps, or charge premium rates for peak‑hour traffic. Such reforms echo pricing models in African markets, where incremental revenue per gigabyte is the norm. Moreover, upgrading feature‑phone users—currently a 67:33 ratio on Vi’s network—to smartphones opens cross‑selling opportunities for value‑added services. If Indian operators can implement a more granular tariff structure, they stand to boost ARPU, fund continued 5G investment, and sustain competitive momentum against global peers.