Telecom Tariffs Set to Rise by 20% in FY27: ICICI Securities Projects Strong Growth and Pricing Power

Telecom industry likely to see significant tariff hike in FY27 as subscriber base grows and pricing power strengthens, says ICICI Securities report.

New Delhi, July 8: Telecom companies in India are expected to hike tariffs by around 20 per cent in financial year 2026-27 (FY27), according to a new report released by ICICI Securities. The report, which initially predicted a tariff increase in Q2 of FY26, has revised its forecast, now anticipating a more substantial hike across all user categories in FY27. The projection is underpinned by growing subscriber numbers, strong data usage trends, and minimal competition from new entrants—factors that are bolstering the pricing power of telecom operators.

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ICICI Securities has released its latest sector outlook, stating that Indian telecom operators are likely to raise tariffs by approximately 20 per cent in FY27, marking a significant development for the industry. The report had earlier projected a tariff increase in Q2 FY26, but now expects a delayed hike, suggesting companies will wait until FY27 to adjust pricing across all consumer categories.

The report expects the subscriber base to continue expanding at a steady 2 per cent annually and anticipates only one major tariff adjustment in FY27. Beyond this, no further pricing shifts have been factored into projections.

According to ICICI Securities, the industry’s adjusted gross revenue (AGR)—including National Long Distance (NLD) revenues—is set to grow at a compound annual growth rate (CAGR) of 9.8% between FY25 and FY30, reaching ₹4,274 billion by FY30. Despite the tariff hikes and revenue increases, market share among major players is expected to remain largely stable.

The report also forecasts incremental AGR market share gains for all three private telecom operators—Reliance Jio, Bharti Airtel, and Vodafone Idea—ranging between 10 to 50 basis points from FY25 to FY30.

In the fixed broadband segment, the outlook is even more bullish. The sector is expected to clock a 15.4% CAGR between FY25 and FY30, with Reliance Jio and Bharti Airtel anticipated to lead growth and capture the largest share of new revenues in the space.

ICICI Securities notes that capital expenditure (capex) by private telecom operators will likely remain flat or slightly reduce, which will contribute to strong free cash flow (FCF). This enhanced cash flow could pave the way for higher shareholder returns, possibly through dividends or share buybacks.

On the satellite communication (Satcom) front, the report points out that companies like Starlink are largely focusing on fixed broadband, while direct-to-consumer (DTC) satellite mobile services are more about supplementing coverage. As a result, the report does not foresee any major disruption from Satcom players within the forecast period.

A key highlight of the report is the growing pricing power of telecom firms. From FY17 to FY25, voice usage grew at a CAGR of 12.6%, and data usage soared at 37% CAGR. The average subscriber now spends more than three hours daily on mobile devices. This surge in demand, coupled with limited risk from new market entrants, has placed telecom companies in a favourable position to set prices with greater authority.

In conclusion, ICICI Securities emphasizes that, with increased data consumption, stable competition, and consistent revenue growth, telecom companies will continue to command strong pricing power and revenue visibility well into the next decade.