According to Morgan Stanley, both prepaid and postpaid mobile users could face higher recharge costs from next year, with telecom operators likely to raise tariffs by as much as 20 per cent. The brokerage noted that operators have already begun tightening pricing through indirect measures, such as withdrawing lower-priced plans and shifting benefits like over-the-top (OTT) subscriptions to costlier packs. These steps are aimed at nudging subscribers to upgrade and lifting average revenue per user (ARPU).
Bharti Airtel, Reliance Jio and Vodafone Idea Limited have raised prepaid tariffs three times in recent years, citing the need to restore sector sustainability and fund investments in 5G networks. The first round of hikes in 2019 ranged from 15-50 per cent, followed by increases of 20-25 per cent in 2021. Tariff hikes last year were relatively moderate, largely in the 10-20 per cent range.
While analysts had earlier expected another 15 per cent hike in 2025-26, this has not yet materialised. Morgan Stanley, however, believes pricing power remains intact. Its medium-term estimates peg industry ARPU potential at Rs 370-390 by 2031-32, with scope for further upside.
For Airtel in particular, the brokerage highlighted data monetisation as the key driver of ARPU growth, projecting mid-single-digit gains over the next three to five years. Morgan Stanley also pointed out that telecom revenues as a share of India’s gross domestic product (GDP) could rise beyond levels seen in other markets.
