Credit matrix for telecom companies will improve in FY27 as the capital expenditure intensity shows signs of moderation for the industry, as per India Ratings in its latest telecom outlook.
Looking at overall industry dynamics, India Ratings said telcos such as Bharti Airtel and Reliance Jio are in the final phase of 5G expansion.
The capex intensity for the two telecom companies is already moderating and while Vodafone idea has accelerated capex plans for the next three years, the industry is likely to show moderation compared to 2024 and 2025.
“The overall situation for the industry as a whole is likely to show improvement as it has shown in FY26, improving free cash flow supported by lower capex,” said Priyanka Bansal, Associate Director, Ind-Ra.
Slower ARPU growth
Regarding ARPU, the firm said its growth will slow down, limited to 5 per cent in FY27 considering broadband penetration already goes beyond 75 per cent plus and 5G penetration is at 40 percent.
Telcos will still generate ROCEs of over 10 per cent but for an ROCE of over 15 per cent, ARPU will have to grow by ₹35-40.
“In the absence of one more tariff hike in the industry, ARPU growth led by organic growth might take some time to attain ROCEs upwards of 15 per cent,” said Bansal.
5G FWA to support fibre
The firm also anticipates growth in the Fibre-to-the-Home services with 5G FWA serving as a suplementary solution.
Mobile broadband penetration reached more than 75 per cent and continues to grow over the year. India Ratings estimated that the pace of growth will now slow down even as Vodafone Idea begins ramping up its 5G rollout.
Meanwhile, FTTH penetration is less than 15 per cent, possibly because the ARPU is 2-3 times that of the mobile broadband services.
The potential market size is also huge and thus it offers many opportunities. However, FTTH faces challenges such as elevated cost of deployment, elevated capex, multiple approvals that limit its expansion.
Based on company analysis, the analyst said FTTH players will have the payback period for the high capex in this segment is as high as 43 months.
5G FWA can be a solution in this regard, oqwing to its internet serve speed or latency. It can cater to areas where FTTH cannot reach due to capex costs.
“Reliance Jio and Bharti Airtel have reported total subscribers which under 5G FWA are already 11 billion in less than a year. In the last year, 5G FWA constitutes more than 70 per cent of the overall growth in the subscriber addition for ex-mobility broadband subscribers out of total subscriber addition. 5G FWA is already leading broadband expansion ex-mobility,” said Bansal.
Published on March 3, 2026
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