Telcos set for steady Q3 as subscriber adds, ARPU inch up; tariff hike by end-FY26: Analysts

telecom

• Bharti Airtel and Vodafone Idea to see modest Q3 revenue and ARPU growth
• Subscriber additions and 2G-to-4G/5G migration aid telecom sector gains
• Analysts expect another major tariff hike by end of FY26

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India’s top telecom operators are set for a steady December quarter, with Bharti Airtel and Vodafone Idea expected to post modest sequential gains in revenue and ARPU, aided by subscriber additions, continued 2G-to-4G/5G migration and a gradually improving pricing environment. The Street is also factoring in another round of tariff hikes in the second half of 2026, analysts at leading brokerages said.

“We expect India telcos to report a stable set of results in 3Q: expect Bharti Airtel and Vodafone Idea’s cellular revenues to increase 2.5% and 2.1% Q-o-Q mainly driven by net adds & slight ARPU uptake. We also expect EBITDA margins to be sequentially flat to slightly up,” BoFA Securities said in a note seen by Moneycontrol.

ICICI Securities, in a separate note, said telecom operators could report steady Q3FY26 earnings, supported by stable subscriber growth and premiumisation. “We expect subs to grow 0.6% Q-o-Q, primarily gaining on strong net add for RJio in Q3FY26, at 7.2 million (including FWA).”

Subscriber additions for Bharti Airtel are pegged at 2 million Q-o-Q, while Vodafone Idea’s subscriber base may decline by 2.5 million Q-o-Q.

“We expect Bharti’s 4G/5G subs net add of 4.5mn, and VIL’s 4G subs to rise 1.5mn. Bharti Airtel’s ARPU may grow 0.8% Q-o-Q, largely driven by premiumisation, aiding mobile services revenue growth of 1.3% Q-o-Q. VIL’s revenue is likely to grow 0.7% Q-o-Q while RJio is expected to outperform with growth of 2.1% Q-o-Q (led by FWA),” ICICI Securities said.

Morgan Stanley separately expects Bharti Airtel’s ARPUs to edge up, supported by ongoing 2G-to-4G upgrades, prepaid-to-postpaid migration and improved data monetisation.

Indus Towers is also expected to report ~1.7% Q-o-Q revenue growth, driven by a 1.5% Q-o-Q increase in co-locations, amid rising capex from Vodafone Idea as it focuses on expanding coverage and capacity.

Analysts broadly expect another 12–15% tariff hike by the end of FY26.

“While we expect tariff hikes to be imminent in 1QFY27, we believe even post the tariff hikes we see room for ARPU increases led by data monetization and value added services,” Centrum Institutional Research said in a note.

Centrum added that the pricing environment has turned more favourable with only 3+1 players, a trend already evident in the July 2024 tariff hikes by all three leading telcos, as the focus shifts to ARPU expansion to improve overall ROCE.

BoFA said it expects a headline tariff hike in the mobile market in the second half of the calendar year 2026.

Citi Research said the year ahead for the Indian telecom sector will be shaped by two broad frameworks. The first centres on the two major telcos—Jio and Bharti—where key drivers include Jio’s potential listing, tariff hikes driving ARPU improvement, sustained home broadband momentum, declining capex intensity, and improving FCFs and ROCEs.

The second, Citi Research said, has significant implications for Vodafone Idea and Indus Towers, encompassing developments such as government AGR relief, a capital raise by Vodafone Idea, and the potential for dividends, Citi added.