Indian Economy News

Jio, Airtel to grow on user gains, tariff hike: Analysts

Reliance Jio and Bharti Airtel are expected to deliver strong revenue and operating income growth over the next two to three financial years. According to Motilal Oswal, Reliance Jio is anticipated to achieve a 17% revenue and 21% operating income growth annually through FY25-28. This growth is driven by a potential tariff hike by the year-end and an acceleration in its fixed wireless access (FWA) offerings. Jio is projected to be the biggest growth driver for its parent company, Reliance Industries, with a 21% Ebitda CAGR over FY25-27. The growth is attributed to a tariff hike in December, market share gains in wireless, and a ramp-up of home and enterprise businesses. Goldman Sachs estimates that Bharti Airtel's India business will deliver 15% revenue and 21% EBITDA growth annually over FY25-27, with steady market share gains at Vodafone Idea's expense and a tariff hike in the second half of 2025. The global brokerage has also raised Airtel's revenue estimates for FY26-30 by up to 2% due to better-than-expected growth across wireless and non-wireless segments in Q4 FY25.
India's private carriers last hiked mobile rates in July 2024. However, Airtel's vice chairman and managing director, Mr. Gopal Vittal, recently highlighted the need for further tariff increases to improve the sector's financial health. Goldman Sachs expects Airtel's market share gains to continue if Vodafone Idea (Vi) cannot invest significantly in capex over the next few years. Vi's capex plan of Rs. 50,000-55,000 crore (US$ 5.85- 6.43 billion) can only proceed after securing a pending Rs. 25,000 crore (US$ 2.92 billion) credit line from banks. In contrast, Jio's higher cash flow from operations (CFO) and falling capex have helped it achieve positive free cash flow (FCF) in FY25. The company's Return on Capital Employed (RoCE) is also expected to grow as it monetises 5G airwaves acquired in the 2022/2024 auctions. In the Q4 FY25, Jio and Airtel gained 21 million and 15 million 5G customers, respectively, boosting their 5G user bases to 191 million and 135 million.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.