Telecom tariffs could see a broad-based increase of around 12% over the next four to six months, potentially around November-December, according to Centrum India's Piyush Pandey. As reported by CNBC TV18, this timeline follows the last tariff increase in July 2024, with tariff hikes typically happening every two to two-and-a-half years. A tariff increase could provide significant earnings boost to telecom operators, with Pandey expressing preference for Bharti Airtel and Indus Towers within the sector.
Telecom operators are implementing higher tariffs to improve average revenue per user (ARPU), a key industry performance metric. According to reports from Business Standard, ARPU has remained above ₹190 but below ₹200 since the last tariff increase in July 2024. Bharti Airtel leads with the highest monthly ARPU at ₹264, followed by Reliance Jio at ₹216. Vi (Vodafone Idea) trails significantly at ₹177, while state-owned Bharat Sanchar Nigam Ltd (BSNL) remains at the bottom with over ₹100.
Vodafone Idea faces significant funding requirements for its network expansion plans, with Centrum's Piyush Pandey estimating the company will need ₹35,000-40,000 crore of external funding to support its ₹45,000 crore network expansion plans over the next three years. The company's current cash EBITDA stands at around ₹10,000 crore annually, making external funding crucial for its 4G and 5G network expansion. Vodafone Idea's 4G coverage currently stands at 86%, compared to more than 90% for both Bharti Airtel and Jio.
Despite improved operating performance including customer additions, higher ARPU, and stable operating margins, Vodafone Idea remains expensive at its current valuation of around 13 times FY28 EV/EBITDA, according to Centrum's analysis. Pandey prefers Indus Towers as a better investment vehicle to play Vodafone Idea's revival, citing the company's reasonable valuation at 6 times FY28 EV/EBITDA, resumed dividend payments, and expansion into Africa. Indus Towers is expected to benefit from higher network spending by Vodafone Idea through increased tower additions and colocations.
