Mobile Tariffs To Go Up By 15% In June 2026; Jio IPO To Boost Sector Valuation: Jefferies

After almost two years, telecom operators are projected to hike mobile tariffs by 15% to boost revenue growth rate of the sector, an analyst report by Jefferies stated on Thursday.

The potential hike estimated to increase the revenue growth rate in FY27 by more than two-fold.

Further, the report was collated by Equity Analyst Akshat Agarwal and Equity Associate Ayush Bansal also outlined that a proposed initial public offering (IPO) of Jio in the first half of 2026 will amp up the valuation of the sector as well as support an increase in mobile services rates.

"We expect mobile tariffs in India to rise by 15% in June 2026, two years after the last tariff hikes — in line with trends in the past," the report said.

Rising data penetration, postpaid penetration, as well as increasing data usage, are driving up mobile ARPU (average revenue per user) in India, besides headline tariff hikes, the report said.

"We expect sector revenue growth to pick up to 16% YoY in FY27, as against our estimate of 7% YoY in FY26. Given a high likelihood of tariff hikes in CY26, we model a 15% headline tariff hike in Jun-26, which should support a healthy 14% YoY ARPU growth in FY27. We expect subscriber additions to be fairly muted due to the impact of tariff hikes," the report said.

The report projects a hike of 10-20% in mobile tariff by Jio to push its valuation closer to Bharti Airtel, and offer investors a double-digit internal rate of return.

Debt-ridden telecom firm Vodafone Idea will need to increase the mobile services rates by 45% between FY27 and FY30 to meet its statutory dues obligation, the report said.

The government has frozen AGR dues of VIL at Rs 87,695 crore, which the struggling company has to start paying from the 2031-32 fiscal year and clear by 2040-41.

"The govt's reported plan to offer a 5-year moratorium on AGR payments would result in a 35-85% reduction to VIL's outflow toward government dues over FY26-30. However, VIL would still need a cumulative tariff hike of 45% over FY27-30 to service these payments. Moreover, it would have to raise debt/equity to fund its network investments," the report said.

According to analysts, telcos are also expected to see an increase in their margins due to lower capex investments.

"We believe that the bulk of the 5G network roll-outs are now complete. Sector capex has already started moderating from FY25, and the intensity is likely to remain moderate in FY 2026-27."

"We expect Bharti Airtel's capex intensity to remain moderate at 20-21% capex to sales in FY26-27 from FY24-25 levels of 22-26% of sales. For Jio, we expect cash capex intensity to fall from 36% in FY25 to 15% of sales in FY27," the report said.

(With inputs from PTI)