According to a research note by the India Ratings and Research (Ind-Ra), crucial central government decisions, including the conversion of Vodafone Idea Limited’s (Vi) statutory liabilities into equity, and the deployment of financial support to Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) would affect key industry parameters such as average revenue per user (ARPU) and recovery in return ratios in near-term.
It added that these decisions would determine the overall dynamics of the telecom industry over the next two to three years, and meaningfully impact the competitive intensity.
Ind-Ra estimated industry-wide tariffs to rise six to 10 per cent year-over-year (YoY) in the financial year 2025-26 (FY26), due to the base effect of the recent tariff hikes, and organic tariff growth of three to five per cent backed by the change in user mix. It, however, maintained a neutral outlook for the telecom industry for FY26.
Ind-Ra cautioned that the outlook for the telecom tower sector remains deteriorating for FY26 as the benefits of 5G-led capex are not visible in the performance, and the continued dependency on the government, elongating overdue receivables and part-conversion of the same into equity for Vi.
