The impact on Vodafone Idea (Vi) could be harsher with a 15 per cent hit on Ebitda, and a delay in tariff could also push the next round to further than July 2029, analysts at brokerage Motilal Oswal said in a note. Headline tariffs have been raised by 10-20 per cent every two years, since 2019, making the timing of these events crucial.
“We continue to maintain our assumption of July 2026 tariff hike for now, but note that a delay to Dec 2026 could lead to ₹10 decline in our FY27 Arpu, translating into a 2-5 per cent cut in our FY27 Ebitda/TPs for Bharti, RIL, and Hexacom (BHL), and a higher about 15 per cent cut in our FY27 pre-IND AS Ebitda for Vodafone Idea,” analysts at the brokerage said.
“A delay in the upcoming tariff hike would also likely push the next round of tariff hikes further out — likely to July 2029 versus our expectations of mid-FY29,” they added.
According to industry executives, the delay in tariff hike could be led by the delay in the timing of the Jio Platforms Ltd public listing, which was announced to take place in the first half of the ongoing calendar year, in addition to recent geopolitical developments.
“There’s certainly a case for tariff hikes, which is likely to happen after the Jio IPO. The quantum of the hike usually varies from plan to plan, but it has hovered around 10-20 per cent, in line with the previous rounds of tariff increases,” a senior executive said, asking not to be named.
“We believe that the success of Jio’s IPO is critical for Reliance. Hence, after the Jio listing, tariff repair is likely to be more predictable,” said analysts at Ambit Capital in a note. “Jio’s value creation thrust post-listing and VI’s survival imperative are credible catalysts for 12% biennial price increases beyond the 15% tariff hike in Dec-26,” they added.
While carriers appear to be testing waters with tweaks to some of the mid-level tariff packs with three-month long validity, an across the board increase in the headline limits is required to raise telcos’ Arpus.
Arpu is a metric that determines the profitability of a telecom service provider.
Carriers, primarily Airtel, have long maintained that Arpu should reach levels of ₹300 a month, to get adequate returns on capital employed. As an industry, telcos invest billions into infrastructure as well as spectrum to provide services to millions of mobile phone users. For instance, carriers such as Airtel and Reliance Jio had invested nearly ₹3 trillion for launching 5G services.
According to estimates by Motilal Oswal, for every ₹10 increase in ARPU, consolidated Ebitda for a player like Airtel would rise by ₹3,400 crore and for Reliance Jio, it could rise by ₹3,900 crore. For Vi, which is implementing a capex heavy plan over the next three years, a ₹10 rise in Arpu would mean ₹1,500 crore.
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