Telecom revenue growth may slip to single digits without tariff hike

New Delhi: Telecom sector revenue growth could slow to single digits this fiscal year in the absence of tariff hikes, said market trackers. Industry revenues grew around 10% in FY26, down from 13% in FY25.

Telecom operators are potentially holding off on raising mobile tariffs due to prevailing inflationary pressures on household budgets worsened by the Iran war.

Analysts expect subdued revenue growth over the next few quarters if tariff hikes are delayed further.


They are currently expecting a 15% rise in mobile tariffs by the fiscal second quarter, translating to a ₹50 hike for the 28-day pack with 1.5GB daily data allowance. This would boost sector revenue growth to 11% on-year to ₹3 lakh crore in FY27, brokerage Motilal Oswal said in a report Friday.

"Historically, we have observed that industry leaders' wireless revenue growth moderating to single digits YoY has been a precursor to the next round of tariff hikes," said Motilal Oswal.

Wireless mobile revenue growth slowed to 7% year-on-year in the quarter ended March, with the effect of tariff hikes in July 2024 now fully baked in, the brokerage said.

Operating income of the three private telecom operators Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi) is expected to rise by 4-5% in FY27 to ₹4-4.2 lakh crore, according to an ICRA report in May. The ratings agency said previous tariff hikes translated into healthy operating metrics in FY26, raising operating income by an estimated 17%.

"ARPUs for FY2026 increased by around 8.2% YoY to about ₹220, and are expected to improve further by 3-5% to around ₹230 in FY2027, supported by likely tariff hikes in FY2027," said ICRA.

Jio, Airtel, and Vi's combined wireless revenues grew around 10% in FY26 to ₹2.7 lakh crore, a slowdown from around 13% growth in FY25, the brokerage said. This revenue growth was driven largely by a premiumisation of subscriber mix in the absence of headline tariff hikes.

"Upgradation from non-data to data has been a key driver of ARPU growth in the absence of a headline tariff hike," Motilal Oswal said. The brokerage said growth in data subscribers came even as overall wireless consumer growth remained muted since FY17.

While the three telcos combined added a net 18 million wireless users in FY26, data-opting subscribers grew by 31 million to reach 889 million, comprising 87% of the total user base, a 1.5 percentage point increase. In the absence of tariff hikes, incremental data usage has acted as a headwind to monetisation through data top-up vouchers.

"We believe that beyond the next tariff hike, telcos need to rework the pricing architecture to monetise the secular 20%+ YoY growth in data consumption," said Motilal Oswal. "We believe a change in tariff architecture could drive higher growth for telcos."