Telecom Industry Tariffs to Go up by 6-10% in FY26: Ind-Ra

The Indian telecom sector is going to witness a growth in average revenue per user (ARPU) and an improvement in the ROCE (return on capital employed) due to the tariff hikes implemented recently by telcos. However, they are not enough for the telcos to achieve an ROCE of 15%. For that, they need their ARPU from Q2 FY25 to go up by 25-35%. The full impact of the tariff hike implemented in July 2024 will come into realisation only after a few more quarters.

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But in order to improve their returns, the research and ratings firm Ind-Ra believes that the industry-wide tariffs would go up by 6-10% in FY26. In the coming financial year, two things will have a key impact on the telecom industry, said Ind-Ra. The first would be whether the government decides to go ahead with converting the statutory liabilities of the telcos into equity for itself, and the second would be how the financial support is given to the two public sector companies (BSNL and MTNL).

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BSNL and MTNL Support will Determine how the Industry Shapes Up

The support to BSNL and MTNL would determine how the competitive landscape will shape up, and how it will affect the private telecom operators. ROCE will be a key figure for the telcos in the coming year, as they have moderated capex towards 5G rollout and are now focusing more on returns.