Your mobile bill may rise again. Ambit Capital sees 15% tariff hike in December, picks Bharti Airtel as top bet
1/9
Mobile bills are set to rise again, and brokers are betting on it
Ambit Capital has come out with a positive view on India’s telecom sector after its digital infrastructure conference. Its core thesis is a 15% tariff hike in December 2026, followed by a 12% price hike every two years over the next decade. Experts at the conference discussed satellite services, datacentres, new radio technologies and the way telcos are turning into tech platforms. According to Ambit, none of it threatens the tariff thesis.
Ambit’s positive view rests on two things. One is the pricing discipline it expects after Jio’s listing. The other is the government’s wish to keep three private players in the market. Its target valuations imply a 2-4% FY27 free cash flow yield for Airtel and Jio, against about 10% for telecom stocks globally. Bharti Airtel is its top sector pick.
Ambit’s positive view rests on two things. One is the pricing discipline it expects after Jio’s listing. The other is the government’s wish to keep three private players in the market. Its target valuations imply a 2-4% FY27 free cash flow yield for Airtel and Jio, against about 10% for telecom stocks globally. Bharti Airtel is its top sector pick.
2/9
Why a December hike looks likely
Ambit points to several signals. Jio’s new “Jio Prime” membership locks plan prices until 5 September 2027, which hints that Jio plans price moves in the coming months. Airtel scrapped its 1.5GB/day entry-level plan in August 2026 and raised postpaid prices. Ambit estimates that removing the entry plan alone lifts average revenue per user (ARPU) by 4.4%.
The industry’s economics also need repair. Pre-tax return on capital employed (RoCE) was only about 10% in FY26, below the cost of capital. Airtel India and Reliance Jio stood at roughly 11% and 8%. Ambit expects 9-12% ARPU growth a year for Indian telcos over FY26-28.
The industry’s economics also need repair. Pre-tax return on capital employed (RoCE) was only about 10% in FY26, below the cost of capital. Airtel India and Reliance Jio stood at roughly 11% and 8%. Ambit expects 9-12% ARPU growth a year for Indian telcos over FY26-28.
3/9
Vodafone Idea’s survival depends on higher tariffs
Ambit says Vodafone Idea (VI) needs ARPU above Rs300 by FY30, against about Rs177 today. After building in a 15% hike in December 2026, it expects VI to generate Rs171 billion of cash EBITDA in FY28. That compares with statutory dues of Rs216 billion in the same year. VI therefore needs consistent hikes, though Ambit says they need not be as steep as in past years.
Reliance has its own reason to support higher prices. It wants investors in Jio Platforms to earn over 10% USD returns. Together, these pressures are why Ambit expects periodic “tariff repair” to continue.
Reliance has its own reason to support higher prices. It wants investors in Jio Platforms to earn over 10% USD returns. Together, these pressures are why Ambit expects periodic “tariff repair” to continue.
4/9
The government wants three players, and the regulator is not standing in the way
TRAI has the power to regulate mobile tariffs but has largely held back. It uses that power only in select areas such as bulk commercial SMS and number portability charges, which has left mobile pricing to the market. It has still pushed for affordability, including a rule that operators must offer voice and SMS-only recharge plans. Airtel complied with a Rs185 plan valid for 28 days.
Experts at the conference said the industry is balancing consumer and investor interests. Ambit sees limited regulatory risk to its view. Its biggest policy risk is the government favouring a new telecom entrant.
Experts at the conference said the industry is balancing consumer and investor interests. Ambit sees limited regulatory risk to its view. Its biggest policy risk is the government favouring a new telecom entrant.
5/9
Datacentres are the next big bet, but the returns are getting tougher
Both Airtel and Jio are investing in datacentres through separate entities that bring in low-cost outside capital. Ambit warns the segment has become crowded. Payback periods have stretched to about 11 years from 4-4.5 years before Covid. The biggest risks are execution problems, with power and water supply emerging as the choke points.
Ambit sees ways to improve returns. Tier-2 markets with new submarine cable landing stations, such as Dholera, Digha, Puducherry and Vizag, help control costs. Small and mid-sized customers account for 55% of India’s datacentre IT load and bring better ARPU. Private cloud services built on telcos’ enterprise relationships could lift returns above utility levels. Edge datacentres could be a growth avenue for tower companies with limited competition.
Ambit sees ways to improve returns. Tier-2 markets with new submarine cable landing stations, such as Dholera, Digha, Puducherry and Vizag, help control costs. Small and mid-sized customers account for 55% of India’s datacentre IT load and bring better ARPU. Private cloud services built on telcos’ enterprise relationships could lift returns above utility levels. Edge datacentres could be a growth avenue for tower companies with limited competition.
6/9
What could go wrong
Satellite services are an emerging threat to telcos’ ability to earn more from each user. Ambit believes regulatory safeguards and sovereignty concerns favour the telcos. Telcos’ push to become tech companies by selling their in-house network and customer engagement software also needs more proof. Experts said the market for such products is niche, and the real test is whether they bring in large new revenue or reduce customer churn.
Other risks include power and water linkages for towercos, slow datacentre execution, and a government stance that turns less friendly to telcos.
Other risks include power and water linkages for towercos, slow datacentre execution, and a government stance that turns less friendly to telcos.
7/9
Bharti Airtel, Ambit’s top pick (BUY)
Ambit calls Airtel its top sector pick and rates it BUY. It says the Street is underestimating Airtel’s operating and financial leverage. Ambit’s FY29 estimates are 7% above consensus for revenue (Rs3,254 billion), 5% above for EBITDA (Rs1,851 billion) and 11% above for profit after tax (Rs684 billion). FY28 PAT is 12% above consensus at Rs573 billion.
Airtel has guided to 1GW of datacentre capacity by the end of the decade, up from 240MW. It is adding about 4 million Home broadband subscribers who pay twice the average Indian mobile ARPU. Ambit expects non-mobile revenue to rise from 21% to 30% of the total. It values the company on a sum-of-the-parts basis (11% WACC, 5% terminal growth). Key risks are a government that stops being accommodating and a slowdown in enterprise or home broadband.
Airtel has guided to 1GW of datacentre capacity by the end of the decade, up from 240MW. It is adding about 4 million Home broadband subscribers who pay twice the average Indian mobile ARPU. Ambit expects non-mobile revenue to rise from 21% to 30% of the total. It values the company on a sum-of-the-parts basis (11% WACC, 5% terminal growth). Key risks are a government that stops being accommodating and a slowdown in enterprise or home broadband.
8/9
Indus Towers and Vodafone Idea (both BUY)
Indus Towers (BUY): Ambit uses a DCF valuation with an 11% WACC and 4% terminal growth. The company’s fortunes depend on the government keeping three private players alive, as VI is a major tenant. Edge datacentres could open a new growth avenue. Risks include slower tower rollouts by Airtel, execution trouble at VI, and a 2G shutdown by Airtel or VI.
Vodafone Idea (BUY): This is a turnaround call. VI added 0.3 million subscribers in 1QFY27, its first quarterly gain since the merger. Its ARPU (excluding M2M) rose 10.2% year-on-year to Rs195. Ambit also expects AGR relief and a planned debt raise to help. Its DCF uses a 13.3% WACC and 4% terminal growth. Risks are persistent churn after network rollout and government support for a new telco.
Vodafone Idea (BUY): This is a turnaround call. VI added 0.3 million subscribers in 1QFY27, its first quarterly gain since the merger. Its ARPU (excluding M2M) rose 10.2% year-on-year to Rs195. Ambit also expects AGR relief and a planned debt raise to help. Its DCF uses a 13.3% WACC and 4% terminal growth. Risks are persistent churn after network rollout and government support for a new telco.
9/9
Bharti Hexacom, and what to remember
Bharti Hexacom (BUY): Ambit values it on a DCF basis (12% WACC, 5% terminal growth) and sees it benefiting from the industry-wide tariff repair. Risks are delays in tariff hikes by the larger players and a big increase in access charges by Bharti Airtel.
The bottom line: Ambit Capital rates all four stocks BUY, with Airtel as its top pick. Its call rests on a 15% hike in December 2026, 12% hikes every two years and a three-player market. Watch for the December price move, the Jio listing and any change in government stance.
Source: Ambit Capital research. This is a summary of the broker’s views, not investment advice. Check current prices and consult a registered adviser before investing.
The bottom line: Ambit Capital rates all four stocks BUY, with Airtel as its top pick. Its call rests on a 15% hike in December 2026, 12% hikes every two years and a three-player market. Watch for the December price move, the Jio listing and any change in government stance.
Source: Ambit Capital research. This is a summary of the broker’s views, not investment advice. Check current prices and consult a registered adviser before investing.