India's Telecom Sector Poised for Another 12-15% Tariff Hike in 3-4 Months

New Delhi: India's telecom industry could see another 12-15 per cent tariff hike over the next three to four months as the pricing environment has become more favourable following market consolidation, according to a Centrum Institutional Research Q1FY27 telecom and internet sector preview report.

"The pricing environment has become more favourable with only 3+1 players and we expect another 12-15% tariff hike over the next 3 to 4 months," the brokerage said in its report.

Talking about the financial performance of the telecom sector, the report said the three private telecom operators are expected to report a 1-1.5 per cent quarter-on-quarter increase in Average Revenue Per User (ARPU) in the June quarter, driven by migration of subscribers from 2G to 4G and 5G networks, postpaid customer additions and a higher number of days during the quarter.

Centrum said Bharti Airtel and Reliance Jio are expected to continue gaining subscriber market share at the expense of Vodafone Idea.

"Bharti Airtel and Reliance Jio would continue to gain subscriber market share at the expense of VIL. Reliance Jio is expected to add ~7mn subscribers QoQ, while Bharti Airtel is expected to add ~5mn subscribers QoQ. We expect VIL to add ~0. 2mn customers QoQ," the report said.

The brokerage also expects data usage per customer to remain strong as 4G and 5G penetration continues to increase across the country.

"Data usage per customer would remain robust, led by growing penetration of 4G/5G networks. Reliance Jio and Airtel have covered 90%+ districts with 5G services and the focus is on adding more 5G devices to their network," the report said. It added that both companies are also seeing "strong traction in terms of 5G FWA and fixed broadband addition as penetration in the segment remains low."

The report said Vodafone Idea is also expanding its 5G footprint, noting that "VIL's 5G network is present in around 100 cities and it is ramping up its 5G coverage." It also highlighted that the company's adjusted gross revenue (AGR) dues have reduced, saying, "AGR dues liability has significantly come down for VIL to Rs 25k crore as present value of future AGR payment obligations."