Rural broadband growth to fuel India’s next telecom boom

For years, India’s telecom growth narrative has mainly been urban-centric. Metros and tier-I cities led the surge in data consumption, smartphone penetration, and digital transformation. But for some time now, a quiet revolution has been unfolding in the heart of the country. Rural India is no longer a passive participant—it is becoming a formidable engine of telecom growth, and this shift is both promising and profound.

According to Crisil Ratings, Internet penetration in rural India rose dramatically from 59% in January 2021 to 78% in December 2024, surpassing the growth rate in urban areas. With an expected increase of 4-5% by the end of FY2026, this expansion is being powered by widespread digital adoption, changing user behaviour, and increasing accessibility to affordable smartphones and data plans.

Rural India: The New Digital Growth Driver

Today, digital tools are as integral to the lives of rural citizens as they are to their urban counterparts. From farmers checking weather forecasts and commodity prices online, to students attending virtual classrooms and small business owners managing inventory or payments via apps, rural India is fully embracing the digital age.

This widespread reliance on mobile data has created a tectonic shift in consumption patterns. Notably, despite broadband being traditionally viewed as more sophisticated, rural users have demonstrated a sustained appetite for it. While urban subscriber additions slowed, the rural demand remained robust, underlining the indispensability of mobile Internet in these regions.

Rural users depend heavily on mobile networks for Internet access, making data consumption a core necessity, not a discretionary expense. It is no surprise, then, that rural areas are contributing increasingly to the telecom sector’s data traffic growth.

Telcos Expand Focus on Non-Urban Markets

India’s telecom service providers (TSPs) have recognised the massive untapped potential in rural regions and are taking focused steps to tap into this demand. Whether it is about optimising tariff plans, rolling out new spectrum, or investing in tower infrastructure, the push to expand rural coverage is well underway.

The June 2024 spectrum auction saw a large share of spectrum acquired in category B and C circles, signalling a clear pivot towards non-urban markets. To extend the benefits of digital connectivity beyond the reach of terrestrial networks, telecom companies are also investing in satellite-based services. Certain entities are also exploring high-speed, low-latency connectivity solutions to serve remote communities, schools, health centres, and enterprises.

In addition, the launch of affordable devices like JioBharat—an affordable 4G handset—has democratised access to data services. Airtel’s ‘Rural Enhancement Project’ aims to improve last-mile connectivity and deliver high-quality, affordable services to underserved areas. Vi is enhancing its 4G network by deploying new tower locations and boosting existing infrastructure across rural and semi-urban pockets.

5G and FWA Fuel Deeper Rural Penetration

India has witnessed the world’s fastest 5G rollout, with telecom operators working relentlessly to bring high-speed connectivity to even the most remote corners of the country. Indian telcos have fulfilled their minimum 5G rollout obligations across all 22 circles, and 5G services are now available in 99.6% of India’s districts. As of September 2024, Airtel’s 5G network spanned over 140,000 villages, while its 4G services reached 800,000 villages. Jio has a large-scale standalone 5G access network leveraging the 700 MHz band to strengthen rural connectivity.

Vodafone Idea has also introduced 5G in major cities and plans to roll out across the rest of India in a phased manner. According to the Nokia MBiT 2025 report, 5G traffic across India tripled in just a year, with rural and semi-urban areas emerging as the epicentres of this growth. Fixed Wireless Access (FWA) is emerging as a game-changer in this space, enabling reliable broadband delivery in underserved regions. As 5G networks grow, FWA will become a crucial tool in bridging the digital divide and making Internet access more inclusive and equitable across India.

Government Initiatives Build Digital Backbone

Parallel to industry efforts, the government is also playing a vital role in strengthening rural digital infrastructure. Initiatives like BharatNet are being rolled out in phases to bring broadband connectivity to every Gram Panchayat and beyond.

The recently launched National Broadband Mission 2.0 (January 2025) aims to accelerate the creation of digital communication infrastructure and bridge the digital divide. Under the Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA), six crore rural households are being equipped with digital literacy, laying the groundwork for inclusive digital growth. Together, these programmes are creating a conducive environment for telecom expansion, ensuring that digital services are not just accessible but also usable and beneficial to rural citizens.

Connectivity Delivers Broad Socio-Economic Value

The rural telecom revolution is about more than just better coverage or faster Internet. It is creating ripple effects across the economy and society. Over the past decade, the number of rural telephone connections has increased from 377 million in March 2014 to over 527 million as of October 2024. This surge in connectivity is enabling a host of transformational outcomes. In Tier II and III cities and small towns, better access to digital tools has fostered the growth of local entrepreneurs, tech-driven start-ups, and remote workers. Educational platforms, certification courses, and online skill-building programmes are empowering young people to discover new opportunities without having to leave their hometowns.

Digital payments and fintech services are helping rural populations transition to formal financial systems. This, in turn, supports financial inclusion, a critical component of long-term economic stability. Notably, the push for rural connectivity is also reinforcing the digital economy’s contribution to GDP. In FY2022–23, the digital economy accounted for 11.74% of India’s GDP, equivalent to INR 31.64 lakh crore (USD 402 billion). Much of this momentum can be attributed to the expansion of digital access and participation in non-urban regions.

The Business Case: Rural Growth Drives Profitability

Beyond social impact, rural connectivity also makes sound business sense. According to Crisil, the average revenue per user in the industry is projected to increase by Rs 20–25 to reach Rs 225–230 by the end of this fiscal year. Rural users are expected to contribute nearly 55–60% of this growth.

Consequently, the return on the capital employed for telcos is expected to improve from 10% in FY2025 to 12% in FY2026. This underscores a crucial point: investing in rural infrastructure is not just a developmental obligation, but also a strategic business opportunity. The returns, both economic and social, are compelling.

Rural India is no longer on the periphery of digital progress. It is, in many ways, leading the charge. With strategic collaborations, focused investments, supportive Government policies, and increasing affordability of services and devices, the telecom sector is well-positioned to unlock the full potential of India’s heartland.

As we look to the future, it is clear that rural connectivity will be central to building a digitally inclusive, economically vibrant, and socially empowered India. For the telecom industry, this is more than a growth opportunity — it is a chance to create a lasting impact where it matters the most. The rural telecom revolution has begun. And it is here to stay.

The author is a decorated military veteran who retired as the Signal Officer-in-Chief, the head of the Indian Army’s ICT division. He was also the first CEO of the Telecom Sector Skill Council and is the Director General of the Cellular Operators Association of India (COAI).