India’s telecom sector is set for another round of price repair, with average revenue per user (ARPU) expected to rise 13–15% year-on-year in FY27, driven by a likely tariff hike in the second quarter, according to an HSBC report.
The brokerage has penciled in a 15% mobile tariff increase for 4G and 5G users, arguing that the industry’s focus has firmly shifted from subscriber additions to monetizing data-heavy consumption.
Analysts expect the next round of hikes to be backed by sustained growth in data usage and a steady migration of customers to premium plans. That transition, they said, strengthens pricing power for private operators and reinforces capital discipline after years of balance-sheet stress and heavy network spending.
For Bharti Airtel and Reliance Jio, rising ARPU, expanding home broadband bases, and improving free cash flow will remain the main earnings drivers over the medium term.
The anticipated hike also signals continued alignment among private carriers on pricing, a trend that has reshaped the sector’s financial profile since the last tariff revision.
The outlook for Vodafone Idea has improved slightly because the company received relief from its adjusted gross revenue (AGR) obligations which now leave it with outstanding debts of Rs 87,695 crore until December 31 2025 and deferred repayment responsibilities. The action decreases immediate cash demands while increasing the likelihood that the market will maintain its three-company structure.
The market environment for competition remains unchanged because the relief measures do not bring major changes according to analysts.
HSBC noted that Vodafone Idea’s planned capital expenditure of $5.9 billion over the next three years lags Airtel and Jio’s expected $14–16 billion investments. Between FY21 and FY25, the two larger rivals spent $15 billion and $20 billion, respectively, compared with Vi’s $2.6 billion.
Given the funding gap, Vodafone Idea is expected to focus on stemming subscriber losses rather than regaining market share. Its user base is projected to stabilize in the mid-teens percentage range.
Large spectrum payment obligations, the need for stronger operating cash flow, and potential fund-raising remain key overhangs, with future spectrum renewals likely to add to capital requirements.