India’s telecom sector delivered record $32 billion revenue in FY26 despite the absence of tariff hikes, and a moderation in market share losses at Vodafone Idea could now pave the way for another round of price increases, according to Jefferies. The brokerage expects industry revenues to grow at a 13% CAGR to $41 billion by FY28, assuming a 15% tariff hike in December 2026.
Against this backdrop, Bharti Airtel remains Jefferies‘ preferred telecom pick after gaining market share across most circles and accounting for nearly 45% of incremental sector revenues in FY26.
Jefferies said sector revenues rose 10% year-on-year in FY26, driven largely by an 8% increase in average revenue per user (ARPU), even without any tariff hikes during the year. The brokerage noted that while Vodafone Idea continued to lose market share, the pace of erosion slowed, potentially shifting industry focus from subscriber gains to tariff-led revenue growth.
Jefferies on Bharti Airtel: ‘Buy’
Jefferies maintained its ‘Buy’ rating on Bharti Airtel and has a price target of Rs 2,350. This implies 27% upside from current levels.
The brokerage said Bharti Airtel was the biggest contributor to industry growth during FY26, accounting for around 45% of incremental sector revenues. The telecom operator reported 12% revenue growth during the year, while ARPU increased 10%.
According to Jefferies, Bharti Airtel gained 60 basis points of revenue market share in FY26 and delivered market share gains in 19 of 22 telecom circles. Fourteen circles reported double-digit revenue growth during the year.
The brokerage noted that Bharti Airtel strengthened its position in metro markets, where it gained 2.5 percentage points of market share, while also expanding its presence across B-circles and C-circles.
“Bharti Airtel delivered double-digit revenue growth in 14 of 22 circles during FY26. Its market share gains were broad-based, with gains in 19 of 22 markets. Notably, around 70% of gains came from four markets, and in three of these, Bharti Airtel consolidated its leadership position,” Jefferies said.
B-circles and C-circles powered industry growth
Jefferies said growth in the telecom sector was led by B-circles and C-circles, which together account for more than half of industry revenues.
Revenue in B-circles rose 13% year-on-year, while C-circle revenues increased 14%. The brokerage attributed C-circle growth to a combination of subscriber additions and higher ARPU, while B-circle expansion was largely driven by pricing and premiumisation.
Metro markets, by comparison, recorded revenue growth of 4% during FY26.
“Growth was led by an 8% year-on-year rise in ARPU, in absence of tariff hikes, owing to subscriber premiumisation. B-circles and C-circles, which together account for more than 50% of revenues, led growth in FY26,” Jefferies said.
Vodafone Idea’s losses are slowing
Vodafone Idea reported revenue growth of 5% during FY26, supported by a 12% increase in ARPU. However, average active subscribers declined 7%, leading to a further loss of market share.
Jefferies said Vodafone Idea lost 75 basis points of revenue market share during FY26, with losses recorded across 21 of 22 circles. Metro markets and B-circles accounted for the largest erosion.
However, the brokerage noted that the pace of market share losses has begun to moderate. Combined with Vodafone Idea’s ongoing network investments, this could reduce competitive intensity and increase the likelihood of industry-wide tariff hikes.
Sector revenues could touch $41 billion by FY28
Jefferies expects India’s telecom sector to continue expanding over the next two years, supported by subscriber premiumisation, rising data consumption and tariff-led ARPU growth.
The brokerage forecasts sector ARPU to rise from Rs 228 per month in FY26 to Rs 275 by FY28. This is expected to help industry revenues increase from $32 billion in FY26 to $41 billion by FY28.
According to Jefferies, the combination of improving ARPU and a more stable competitive environment could support stronger earnings growth across the sector.
Conclusion
Jefferies believes India’s telecom industry is approaching its next growth phase after delivering record revenues in FY26 without tariff hikes. With Vodafone Idea’s market share losses slowing and industry competition becoming more balanced, the brokerage expects tariff hikes to return to focus. Bharti Airtel remains its preferred telecom stock, backed by broad-based market share gains, double-digit revenue growth across multiple circles and a leading contribution to industry revenue expansion.
Disclaimer: The specific stock ratings, sector CAGR projections, target prices, and tariff growth estimations discussed in this report are based on institutional equity research from Jefferies and do not constitute direct buy, sell, or hold recommendations for retail investors. Equity investments in the telecommunications sector carry inherent risks, including regulatory shifts, intensive capital expenditure requirements for technology deployment, and changing competitive dynamics. Because individual financial goals, risk profiles, and investment horizons vary significantly, readers are strongly advised to consult a SEBI-registered investment advisor or a qualified financial consultant before making specific capital allocations.
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