Whalesbook
Sector Bifurcation
Citigroup analysts predict 2026 will mark a significant turning point for India's telecom industry, dividing players into two distinct groups: consolidated market leaders and those in a high-stakes recovery phase.
This outlook centers on Reliance Jio and Bharti Airtel, which Citi sees benefiting from a confluence of positive factors. These include anticipated tariff hikes, improving average revenue per user (ARPU), moderating capital expenditure, and rising free cash flows over the next two years.
ARPU Acceleration and Jio Listing
Citi expects tariffs to rise, driving a 9-10% compound annual growth rate in ARPU through fiscal years 2026-2028. The timing of the next major tariff increase is now aligned with Reliance Jio's anticipated listing, which Citi projects for the first half of 2026. This shifts the expected tariff hike to the first quarter of FY27.
Bharti Airtel's mobile ARPUs are forecast to grow at a 10% CAGR, while Jio's blended ARPUs (mobile and home broadband) are projected to increase by 9% over FY26-28. Growth drivers include tariff adjustments, deeper 5G penetration, increased data monetization, and wider smartphone adoption.
Value Unlocking and Broadband Momentum
Jio's potential listing is seen as a catalyst for both unlocking value within parent Reliance Industries and reinforcing tariff discipline across the sector. Citi's valuation places Jio's implied equity value at approximately $140 billion within Reliance Industries' sum-of-the-parts analysis.
In the home broadband segment, Jio continues to lead, leveraging 5G fixed wireless access and ultra-broadband commercialization. Citi anticipates over 40% CAGR in revenue and EBITDA contribution from this segment for Jio.
Vodafone Idea's Path Forward
For Vodafone Idea (Vi), proposed Adjusted Gross Revenue (AGR) relief from the government is expected to provide immediate cash-flow support rather than a complete balance sheet overhaul. While liabilities may decrease over time due to reassessment, near-term relief is crucial for Vi to remain a going concern and resume network investments.
Investor attention is now focused on Vi's completion of a ₹25,000 crore bank debt raise, a key trigger for Indus Towers to resume shareholder payouts.