Telcos poised for next tariff hike in Dec; Airtel to challenge for top spot

Motilal Oswal remains positive on the telecom sector and maintains 'Buy' ratings on Bharti Airtel and Reliance Jio via Reliance Industries

Indian telecom operators may be preparing for another round of tariff hikes by December 2025, supported by low inflation and the absence of major state elections in the near term, according to Motilal Oswal Financial Services. The brokerage has factored in a tariff increase of around 15 per cent next month.

 

Private operators have already executed three rounds of smartphone tariff hikes over the past six years, the domestic brokerage noted. 

 

The first, a blended increase of more than 30 per cent in December 2019, came soon after the adverse adjusted gross revenue (AGR) verdict. That was followed by a nearly two-year freeze during the pandemic. Headline tariffs were raised again by over 20 per cent in December 2021, and then by about 17 per cent in July 2024, when pricing for the 28-day 1.5GB-per-day plan rose by roughly ₹50, it said.   ALSO READ | Motilal Oswal sector of the week: Defence; check top bets, target here 

 

 

Motilal Oswal noted that the third hike was delayed by six months because of elevated inflation and the general election cycle. With the July 2024 increase already absorbed in the base, revenue growth for telcos slowed to around 10 per cent year-on-year (Y-o-Y) in the September quarter of FY26 and is likely to weaken further in December 2025 without another tariff action.

 

The brokerage expects the next headline hike to be about ₹50 per cycle on the 28-day 1.5GB plan -- currently priced at ₹299 for Reliance Jio and ₹349 for Bharti Airtel -- implying a rise of nearly 15 per cent. The flow-through, however, could vary across operators given differing subscriber mixes, it said. Despite surging data consumption, India’s data prices remain among the lowest globally, offering scope for further increases, the report said.

 

Potential relief from the government on AGR dues for Vodafone Idea and Bharti Airtel, as well as market share dynamics, could act as headwinds to immediate tariff action. A significant reduction in AGR liabilities for Vodafone Idea could push operators to delay tariff hikes.

 

Motilal Oswal added that should hikes materialise in December 2025, Bharti Airtel could meaningfully narrow its revenue market share gap with Reliance Jio and possibly challenge for the top position by the first half of calendar year 2026, a period that overlaps with the expected timeline for the Jio Platforms IPO. Jio may be reluctant to risk slipping to the No. 2 spot before the listing, which could also defer tariff increases, it said. 

 

The brokerage remains positive on the telecom sector and maintains 'Buy' ratings on Bharti Airtel (target price ₹2,365) and Reliance Jio via Reliance Industries (target price ₹1,765).