Nomura estimates that another 15% hike could be implemented by the third quarter of FY27
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The next cycle of tariff hike by telecom operators may push Indian customers to the edge, according to a Nomura research note that takes a closer look at the tariff cycle and the spending power of the Indian customer.Brokerages have been repeatedly flagging the potential tariff hikes in the coming quarters for India’s telecom sector. Indian mobile tariffs have been revised upward by 19-29 per cent every two years between 2019 to 2024, according to Nomura, which estimates that another 15 per cent hike could be implemented by the third quarter of FY27.“Management consistently argues that India is the cheapest large market in the world in terms of both revenue per user and rate per gigabyte, which, in our view, leaves clear room for tariff repair,” said Nomura in its report.However, data in terms of customer capacity also indicates that India’s screens are the most “stretched” major market in terms of mobile spend as a share of per capita income“We believe India has little tariff hike headroom – incomes are low, so people cannot pay much more. On a per capita income basis, India screens as the most stretched market at 1.1 per cent, above Japan at 0.9 per cent, Canada at 0.8 per cent and most others markets at around 0.6 per cent. The Indian customer already pays too much to bear a hike,” Nomura said.While this suggests consumers can’t absorb more in terms of a tariff hike, the telecom ecosystem faces the threat of a cooling ARPU (average revenue per user) growth without a further price revision. For example, Airtel, that has been adding revenue share consistently while holding a ~INR43 exit ARPU premium over Jio in FY26, said it is ‘’doubling down’’ on every ARPU lever.According to Nomura, a tariff hike could mean a gradual repair of the pricing architecture for companies like Airtel and give a long ARPU runway without pricing out the poor. Airtel with the highest ARPU and richest mix should capture the most.Broadband headroomDespite the strain on mobile customers, the report also points out broadband household spend still remains lower in India compared to China, Japan, Canada, suggesting that some room for pricing increases may still exist within the broader connectivity market.“On a blended basis, the Indian user spends about 1 per cent of disposable income on connectivity, against 2.2 per cent in China and Canada, 2.3 per cent in Japan and roughly 2.1 per cent in the UK, 1.6 per cent in the US and Singapore, the lowest in the sample by a wide margin,” said the report.Published on July 1, 2026
