New Delhi | Telecom operators are expected to increase mobile tariffs by 15 per cent after about two years, which is estimated to more than double the revenue growth rate of the sector in FY27, a report by analysts said on Thursday.
The Jefferies report by Equity Analyst Akshat Agarwal and Equity Associate Ayush Bansal expects that a proposed initial public offering of Jio in the first half of 2026 will increase the valuation of the sector as well as support an increase in mobile services rates.
"We expect mobile tariffs in India to rise by 15 per cent in June 2026, two years after the last tariff hikes -- in line with trends in the past," the report said.
Rising data penetration, postpaid penetration, as well as increasing data usage, are driving up mobile ARPU (average revenue per user) in India, besides headline tariff hikes, the report said.
"We expect sector revenue growth to pick up to 16 per cent YoY in FY27, as against our estimate of 7 per cent YoY in FY26. Given a high likelihood of tariff hikes in CY26, we model a 15 per cent headline tariff hike in Jun-26, which should support a healthy 14 per cent YoY ARPU growth in FY27. We expect subscriber additions to be fairly muted due to the impact of tariff hikes," the report said.
The report projects a hike of 10-20 per cent in mobile tariff by Jio to push its valuation closer to Bharti Airtel, and offer investors a double-digit internal rate of return.
Debt-ridden telecom firm Vodafone Idea will need to increase the mobile services rates by 45 per cent between FY27 and FY30 to meet its statutory dues obligation, the report said.
The government has frozen AGR dues of Vodafone-Idea (VIL) at Rs 87,695 crore, which the struggling company has to start paying from the 2031-32 fiscal year and clear by 2040-41.
"The govt's reported plan to offer a 5-year moratorium on AGR payments would result in a 35-85 per cent reduction to VIL's outflow toward government dues over FY26-30. However, VIL would still need a cumulative tariff hike of 45 per cent over FY27-30 to service these payments. Moreover, it would have to raise debt/equity to fund its network investments," the report said.
According to analysts, telcos are also expected to see an increase in their margins due to lower capex investments.
"We believe that the bulk of the 5G network roll-outs are now complete. Sector capex has already started moderating from FY25, and the intensity is likely to remain moderate in FY 2026-27.
"We expect Bharti Airtel's capex intensity to remain moderate at 20-21 per cent capex to sales in FY26-27 from FY24-25 levels of 22-26 per cent of sales. For Jio, we expect cash capex intensity to fall from 36 per cent in FY25 to 15 per cent of sales in FY27," the report said.
