Average revenue per user (Arpu) for Indian telcos could see a 13-15% lift in FY27, buoyed by headline tariffs later in the year, analysts said in a recent report by HSBC.
However, they added, while Vodafone Idea’s recent AGR relief improves its financial runway without materially altering competitive dynamics, they added.
“We forecast a 15% mobile tariff hike in 2QFY27 for 4G/5G subscribers and expect mobile ARPU to expand by 13-15% y-o-y for the three operators in FY27,” HSBC analysts said.
Tariff hike to be supported by continued growth in data consumption
The increase is expected to be supported by continued growth in data consumption and a steady migration of subscribers to higher-value plans, reinforcing the sector’s focus on monetising rising usage rather than chasing aggressive subscriber additions.
The anticipated tariff move also signals continued pricing discipline among private operators, suggesting that the industry remains structurally aligned on improving returns after years of balance-sheet stress and heavy network investments. For larger players such as Bharti Airtel and Reliance Jio, rising ARPU, expanding home broadband subscriber bases and improving free cash flow are expected to remain the core drivers of earnings growth over the medium term, analysts added.
Vodafone Idea’s outlook, meanwhile, has improved at the margin following relief on its adjusted gross revenue (AGR) dues. The relief, which freezes dues at Rs 87,695 crore as on December 31, 2025 and stretches the payment timeline into later years, eases near-term financial pressure and strengthens the likelihood of India retaining a three-private-player telecom market.
What do analysts say?
However, analysts believe the relief does not fundamentally change Vodafone Idea’s competitive position.
“We believe Vi’s planned network investment is not sufficient for the company to gain market share. We highlight Bharti Airtel and Jio made significant network investments of $15 billion and $20 billion respectively over the last five years (FY21-25). This compares to an investment of $2.6 billion by Vi,” analysts offered, indicating that Vodafone Idea’s capex push may come a little too late in the game.
The brokerage expects Airtel and Jio to invest $ 14-16 billion over the next three years, far higher than the $5.9 billion (Rs 45,000 crore) planned by Vodafone Idea.
As a result, Vodafone Idea is expected to focus primarily on stabilising its subscriber base rather than regaining market share. Its subscriber share is projected to level off at around the mid-teens over the next few years, reflecting a scenario where network investments help reduce customer losses but do not drive significant additions.
Financial constraints remain a key overhang. The company continues to face substantial spectrum payment obligations in the coming years and will likely need a sharp improvement in operating cash flow, alongside potential external funding, to meet these commitments while sustaining network investments. Spectrum renewals beginning later in the decade could add to capital requirements.