Over the past three years, Indian telcos have invested significantly in their networks, to meet their ambitious 5G roll-out plans. Their efforts have been supported by favourable spectrum pricing, accelerated right-of-way (RoW) clearances and production-linked incentives for domestic equipment. With 5G signals already reaching 99.6 per cent of the nation’s districts, the industry has effectively completed the most critical phase of this investment cycle.
A shift in capital allocation priorities invariably follows such a milestone. Having covered the majority of the country, telcos are now pivoting from coverage expansion to capacity refinement, customer experience gains and monetisation of the 5G layer that they have built. At the same time, shareholder pressure to improve balance sheets, stretched by spectrum fees, tower leases and device subsidies has intensified. The capital market itself is signalling a preference for disciplined spending over rapid roll-outs.
Diverging capex paths
Indian telcos are under growing pressure to swap the “build at any cost” model for capital discipline. Higher interest rates, tighter global liquidity and shareholders’ impatience for free cash flow are reshaping boardroom priorities. According to industry estimates, industry capex fell 8 per cent in 2024 and could dip lower through FY 2027, even as data traffic keeps climbing. Telcos are getting more value from their investments by turning core functions into software, renting cloud resources and sharing towers. Due to this, adding new radios or fibre now gives them fewer additional benefits than it did five years ago. Data shows that after a burst of network expansion, the sector’s average return on invested capital now hovers in the high single digits, leaving little room for mistakes. For example, Bharti Airtel has reported a sharp drop in capex for FY 2025-26 after completing its nationwide network upgrade and is redirecting cash-to-debt reduction and transport-network quality gains. Likewise, Reliance Jio spent heavily upfront and now expects its FY 2025 capex to drop sharply to about Rs 295 billion, signalling a shift from network coverage to 5G monetisation.
Interestingly, cash-strapped telco Vodafone Idea Limited (Vi) tells a contrasting story. Years of underinvestment has pushed its capex intensity to as low as 0.21. Its recent expenditure of Rs 95.7 billion, funded by an emergency equity and debt package (worth Rs 200 billion approved by its board on May 31, 2025), is essentially catch-up capex tied to survival conditions.
Bharat Sanchar Nigam Limited’s (BSNL) one-time investment of Rs 260 billion springs from a government revival scheme rather than organic cash flow, underscoring that state money, not market dynamics, is powering its rebuild. The union cabinet has, till now, approved three packages under the revival scheme for BSNL and Mahanagar Telephone Nigam Limited on October 23, 2019; July 27, 2022; and June 7, 2023, respectively, with a combined value of Rs 2.28 trillion.
What does the data say?
Capex intensity paints a clear picture of where each telco stands in the investment cycle. Airtel has maintained a steady capex intensity range of roughly 0.25-0.30 over five years, reaching a high of 0.30 in FY 2024 as 5G deployment peaked, and easing to 0.25 in FY 2025. This steadiness signals a controlled pivot from coverage expansion to capacity fine-tuning and balance sheet repair. Jio’s trajectory, by contrast, tells a story of ambition giving way to consolidation: intensity crashed from a revenue-matching 1.0 in FY 2021 to 0.35 in FY 2022, then intensity range around 0.46 in FY 2024 and nearly halved again to 0.23 in FY 2025. That sharp decline highlights that the “heavy-lift” phase of its standalone 5G roll-out is largely complete.
Vi’s numbers expose the flip side of the capital cycle – cash constraints pushed intensity to 0.04 in FY 2024, but the long-awaited fundraise catapulted the ratio to 0.22 in FY 2025, depicting a late, catch-up modernisation drive. Finally, BSNL’s solitary FY 2025 reading of 1.25 underscores the impact of the state-backed revival package, with the company now spending more than its annual revenue to rebuild a long-neglected network.
Capex per subscriber reflects the same divergence, but through a customer-focused perspective. Airtel spent Rs 640-Rs 630 per user in 2021-22, nearly Rs 970 in FY 2024 Rs 934 in FY 2025, which is still roughly 45 per cent above its pre-5G baseline, reflecting a shift towards densification and quality upgrades rather than raw coverage. Jio’s spend per user surged from Rs 636 to a peak of over Rs 1,020 in FY 2023, remained at that level in FY 2024, and then collapsed to Rs 604 as incremental capex fell and the subscriber base broadened. The operator is clearly moving from a “build for everyone” phase to everaging its existing assets. Similarly, Vi’s profile is the mirror image. After languishing below Rs 200 per user for four years, and even sliding to Rs 85 in FY 2024, its FY 2025 figure rocketed to Rs 483, registering a sixfold jump that signals belated investment concentrated on a much smaller customer pool. While Airtel and Jio are now reaping the benefits of their 5G spend, Vi is only just beginning to rebuild credibility, and BSNL’s absence of subscriber-level disclosure leaves its aggressive network overhaul hanging as a policy-driven uncertain factor.
Industry effect
Ericsson recorded a 17 per cent year-on-year decline in sales in the March quarter of FY 2025 across Southeast Asia, Oceania and India, dropping to SEK 7.2 billion (approximately Rs 63.37 billion) from SEK 8.6 billion (Rs 75.7 billion) a year earlier; on a sequential basis, revenue was down 14 per cent. The decline reflects a sharp reduction in network expansion capex by Airtel and Jio following the completion of their nationwide 5G roll-outs. In contrast, Nokia witnessed a surge in Indian sales from late 2022 through early 2023, immediately after the two telcos began deploying 5G. However, the momentum reduced once the roll-outs were completed in the first half of 2024, as the telcos turned their attention to revenue growth and 5G monetisation.
Net additions of 5G base stations have likewise collapsed. ICICI Securities, using the Department of Telecommunications data, shared that quarterly net 5G site additions fell to just 8,000-9,000 in the second quarter (Q2)/Q3 of FY 2025 from roughly 111,000 in Q2 FY 2024. Industry warns that such a steep slowdown in build-out capex implies weaker tenancy growth, and hence, softer revenue for tower firms such as Indus Towers, which relies heavily on Airtel. Although Vi’s ongoing 4G expansion and early 5G deployments will provide some incremental demand, this is unlikely to offset the gap, particularly as Airtel has also nearly completed its rural 4G expansion.
Further, JM Financial projects industry ARPU to grow at an 11-12 per cent CAGR over the next three to four years. Given the consolidated market structure and Jio’s need to lift ARPU to justify its sizeable 5G capital outlay ahead of a potential listing, sector ARPU is expected to reach Rs 280-Rs 310 over that period through further price hikes, mobile broadband upgrades, post-paid subscriber gains and data services monetisation, translating into a pre-tax return on capital employed of 12-15 per cent.
Global comparison
Globally, telcos like Telstra (+36.1 per cent), SoftBank (+13.4 per cent), British Telecom (+3.3 per cent) and China Telecom (+2.5 per cent) all widened their capex footprints, underscoring their commitment to network upgrades and next-generation services. In contrast, KDDI (-19.9 per cent), America Movil (-19 per cent) and China Unicom (-17.8 per cent) registered steep pullbacks, indicating increased capital discipline and potential delays or reprioritisation of infrastructure projects.
From a regional perspective, the Americas became the largest capex contributor in Q4 FY 2024 (latest available figures), accounting for 36.1 per cent of global telecom capital outlays and overtaking Asia in both absolute spending and capital commitment. Europe, however, topped the chart on capital intensity, with capex accounting for 18.6 per cent of revenues, ahead of the Middle East and Africa at 16.8 per cent. These figures indicate that European telcos continue to invest heavily relative to their revenue base, likely propelled by legacy network upgrades and regulatory imperatives.
Outlook
FY 2026 is at an inflection point. With the intensive 5G roll-out now almost complete, telcos are expected to spend less and spend smarter. Airtel and Jio have both planned big cuts to their network budgets over the next two years, while Vi is using fresh funding to plug coverage gaps. Industry analysts now see total private telco capex settling into a tighter Rs 550 billion-Rs 700 billion range each year through FY 2030, with a focus on small-cell densification, fibre backhaul and edge data centre nodes instead of brand-new macro towers.
Looking ahead, spending is expected to stay moderate unless a new trigger arrives. These include spectrum renewals in 2026-27, a sudden boom in artificial intelligence-driven traffic and government push for 6G research. Barring such events, India’s telcos are likely to focus on squeezing more revenue out of the networks they already have while gradually upgrading fibre depth and software-based features.
Shashwat Singh
