Telecom Tariff Hike Delayed, Analysts See No Q1 Relief

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AuthorAarav Shah|Published at:
Telecom Tariff Hike Delayed, Analysts See No Q1 Relief
Overview

Telecom operators are unlikely to raise tariffs in the January-March quarter, with analysts pushing the next price reset to mid-2026. Sector growth will depend on operational improvements like 2G to 4G/5G upgrades and postpaid additions, not price hikes. Vodafone Idea faces a prolonged recovery but may boost capex on government relief.

Outlook for Tariff Increases

Analysts have pushed back expectations for a telecom tariff hike, now anticipating the next price reset in the second half of 2026. Experts caution that market optimism regarding the timing and magnitude of such increases has outpaced on-ground developments. UBS analysts noted that while government relief for Vodafone Idea and a potential Reliance Jio listing could serve as triggers, neither event is imminent enough to support a March-quarter tariff adjustment.

BofA Securities and Jefferies share this view, projecting a tariff hike around mid-2026. This indicates that the coming quarters will remain pricing neutral for the mobile market. The delay implies that near-term growth for the sector will rely more heavily on operational levers rather than pricing strategies.

Operational Growth Strategies

In the absence of immediate price intervention, analysts forecast low single-digit Average Revenue Per User (ARPU) and revenue growth for all three major operators. Competitive positioning will likely be shaped by subscriber mix and strategic upgrades rather than direct price increases. ICICI Securities highlights that ARPU growth will be driven by premiumization benefits, including 2G to 4G/5G upgrades, higher net additions of postpaid customers, and increased data monetization. Home broadband and fixed wireless access (FWA) are also expected to contribute significantly due to their higher ARPU profiles.

Bharti Airtel and Reliance Jio currently dominate the FWA market, with Vodafone Idea having no stated plans to enter it. This strategic focus on mobility network expansion by the cash-strapped telco is critical for its recovery path.

Vodafone Idea's Fragile Recovery

For Vodafone Idea, the continued absence of tariff support prolongs its already fragile recovery. Analysts anticipate subscriber losses to persist in the near term, with ARPU improvements only partially offsetting the impact. Its absence from the FWA market will also affect its overall ARPU growth potential.

However, with the government freezing Vodafone Idea’s Adjusted Gross Revenue (AGR) liabilities and reassessing dues, the telco is expected to increase its network investments materially. UBS analysts believe Vodafone Idea could significantly step up its capital expenditure, potentially reaching ₹10,000–14,000 crore annually between FY26 and FY28, aligning with management targets.

Competitive Dynamics

Over the next six months, competition between Reliance Jio and Bharti Airtel is expected to center on acquiring active subscribers, expanding their premium customer base, and growing their broadband operations. Jio continues to leverage its scale for subscriber additions, while Airtel's momentum is supported by its postpaid segment growth and expanding home broadband services.

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