Whalesbook
Mobile tariffs across India are poised for a significant 15% increase by June 2026, marking the first major hike in approximately two years. This adjustment, detailed in a Jefferies report, is projected to more than double the telecom sector's revenue growth rate in fiscal year 2027. The report also anticipates that a proposed initial public offering (IPO) of Reliance Jio in the first half of 2026 will catalyze sector-wide valuation increases and bolster support for revised mobile service rates.
Rising ARPU Drivers
Data penetration and usage continue to climb in India. The adoption of postpaid services is also accelerating. These trends, coupled with headline tariff increases, are directly contributing to rising average revenue per user (ARPU) for telecom operators.
Sector Growth Forecast
Analysts forecast sector revenue growth to surge to 16% year-on-year in FY27, a substantial jump from the estimated 7% in FY26. A key driver is the modeled 15% tariff hike expected in June 2026, which should support a robust 14% YoY ARPU growth in FY27. However, subscriber additions may become more subdued as a consequence of these higher prices.
Jio's Strategic Move
Reliance Jio is expected to implement a tariff hike ranging from 10% to 20%. This strategic move aims to elevate its valuation, bringing it closer to that of competitor Bharti Airtel. Such an increase is intended to provide investors with a double-digit internal rate of return.
Vodafone Idea's Debt Burden
The situation is more acute for the debt-laden Vodafone Idea (VIL). The report indicates that VIL would require a cumulative tariff hike of 45% between FY27 and FY30 simply to service its substantial statutory dues. The government has fixed VIL's Adjusted Gross Revenue (AGR) dues at ₹87,695 crore, with payments slated to commence from FY31-32 and conclude by FY40-41.
Moratorium Impact and Funding Needs
A government plan to offer a five-year moratorium on AGR payments is expected to reduce VIL's outflow toward these dues by 35% to 85% over FY26-30. Nevertheless, VIL must still secure a significant tariff increase and potentially raise debt or equity to finance its essential network investments.
Capex Moderation and Margin Improvement
Telecom operators are also anticipating improved margins, partly due to a moderation in capital expenditure. The majority of 5G network rollouts are reportedly complete, leading to a decrease in sector capex from FY25 onwards. This trend is expected to continue through FY26 and FY27.
Company Capex Outlook
Bharti Airtel's capex intensity is projected to remain moderate, between 20-21% of sales for FY26-27, down from 22-26% in FY24-25. For Jio, cash capex intensity is forecast to drop sharply from 36% of sales in FY25 to just 15% in FY27, reflecting completed network build-outs.