India Telcos Eye Steady Q3 Amid Subscriber Growth; Tariff Hikes Loom by FY26
Overview
India's top telecom operators, including Bharti Airtel and Vodafone Idea, are poised for steady Q3 results. Modest revenue and Average Revenue Per User (ARPU) growth is expected, driven by subscriber additions and 2G-to-4G/5G migration. Analysts anticipate another significant tariff hike by the end of fiscal year 2026.
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Indian Telecom Sector Poised for Stable December Quarter
India's leading telecom companies are set for a stable performance in the December quarter. Bharti Airtel and Vodafone Idea are expected to report modest sequential increases in revenue and Average Revenue Per User (ARPU). This growth is underpinned by consistent subscriber additions and the ongoing migration from 2G services to faster 4G and 5G networks.
Key Growth Drivers Identified
Analysts project subscriber additions to bolster sector gains. Brokerage firm BoFA Securities anticipates Bharti Airtel's cellular revenues to rise by 2.5% quarter-on-quarter, with Vodafone Idea seeing a 2.1% increase. EBITDA margins are expected to remain flat to slightly higher sequentially for both operators.
ICICI Securities forecasts subscriber growth of 0.6% quarter-on-quarter, largely driven by Reliance Jio's strong net additions of 7.2 million, including Fixed Wireless Access (FWA) customers. Bharti Airtel is expected to add 2 million subscribers, while Vodafone Idea may see a base decline of 2.5 million. However, Vodafone Idea's 4G subscriber base is projected to increase by 1.5 million.
Bharti Airtel's ARPU is forecast to grow by 0.8% driven by premiumisation, lifting mobile services revenue by 1.3%. Vodafone Idea's revenue is anticipated to grow 0.7% quarter-on-quarter, whereas Reliance Jio is expected to outperform with 2.1% growth, aided by FWA. Morgan Stanley highlighted that Bharti Airtel's ARPU will benefit from 2G-to-4G upgrades, prepaid-to-postpaid migration, and enhanced data monetization.
Future Tariff Hikes on the Horizon
Industry observers broadly expect another round of tariff hikes, estimated between 12% and 15%, by the end of fiscal year 2026. While some foresee these increases materializing in the first quarter of FY27, analysts believe ARPU growth will continue through data monetization and value-added services even post-hikes. The competitive landscape, now consolidated with three major players, has created a more favorable pricing environment, a trend already visible with tariff increases in mid-2024. The industry focus is shifting towards ARPU expansion to improve Return on Capital Employed (ROCE).
Broader Sector Outlook
The coming year for Indian telecom will be shaped by key developments for major players. For Reliance Jio and Bharti Airtel, focus remains on Jio's potential listing, ARPU improvements driven by tariff hikes, sustained home broadband momentum, and declining capital expenditure intensity. For Vodafone Idea and Indus Towers, significant factors include government AGR relief, Vodafone Idea's capital raising efforts, and potential dividends. Indus Towers is projected to report nearly 1.7% revenue growth, supported by a rise in co-locations, as Vodafone Idea invests in network expansion.
