India’s mobile phone users may soon face higher costs for both prepaid and postpaid services, as leading telecom operators are expected to raise tariffs across 4G and 5G plans in the coming financial year. According to a detailed assessment by Morgan Stanley, companies such as Reliance Jio, Bharti Airtel, and Vodafone Idea are likely to push through price increases in the range of 16 to 20 percent during FY27. If implemented, this would mark the next major step in a series of periodic tariff revisions that have reshaped the Indian telecom market over the past few years. The proposed hike reflects the industry’s attempt to balance rising costs, heavy network investments, and long-term financial stability.
For millions of users, mobile connectivity has become a basic necessity rather than a luxury. From online education and digital payments to work communication and entertainment, mobile data sits at the centre of daily life. Any increase in tariffs, therefore, draws wide attention. Analysts believe the coming price revision will affect almost all user segments, covering both prepaid and postpaid customers on 4G and 5G networks. While the move may strain household budgets in the short term, telecom companies argue that higher prices are essential to maintain service quality and fund future network expansion.
Morgan Stanley’s projection is based on long-term patterns observed in the Indian telecom sector. Over the last decade, operators have revised tariffs roughly once every two years. The most recent increase took place in July 2024, following a gap of nearly three years. Based on this timing, analysts expect the next round to fall in 2026, with its full impact visible in FY27. The brokerage firm has stated that it is assuming a tariff hike of around 16 to 20 percent across plans, a level similar to earlier revisions, but applied to a much larger and more data-heavy user base.
In recent months, telecom companies have already taken smaller steps that point in this direction. Many low-cost recharge plans have either been removed or quietly adjusted. Benefits such as access to streaming platforms and bundled content, once offered with mid-range packs, have been shifted to higher-priced options. This has nudged users towards more expensive plans, even without a direct price hike. As a result, operators have managed to improve their average revenue per user, commonly known as ARPU, which is a key measure of financial health in the telecom business.
The Morgan Stanley note highlights that a formal tariff increase would further strengthen ARPU growth, especially in FY27. Higher ARPU allows telecom companies to recover the heavy spending made on spectrum purchases, tower upgrades, and network rollouts. India’s shift to 5G has required large capital outlays, and while user adoption is rising, returns are still developing. Analysts believe that without regular tariff corrections, it would be difficult for operators to sustain these investments over the long run.
Among the three private players, Bharti Airtel is expected to gain the most from the proposed hike. Morgan Stanley points out that during previous tariff revisions, Airtel showed stronger gains in revenue and operating profit compared to weaker rivals. This pattern is linked to Airtel’s subscriber profile, which includes a higher share of premium users who are more willing to pay for better network quality and added services. Airtel’s ability to raise prices without losing a large number of customers has helped it steadily improve its financial position.
At the end of the second quarter of FY26, Airtel’s ARPU stood at around ₹256. A 20 percent tariff hike could push this figure beyond ₹300 in the near term. Morgan Stanley’s medium-term projections suggest that Airtel’s ARPU could reach between ₹370 and ₹390 by FY32. The brokerage even stated that Airtel has the potential to touch ₹400 ARPU within the next five years, even if no further tariff hikes take place after 2026. Any future price revisions beyond that would only add to this upward trend.
Reliance Jio, the largest telecom operator by subscriber count, is also expected to benefit from higher tariffs, though its strategy differs slightly from Airtel’s. Jio has focused on scale, low-cost data access, and rapid 5G expansion. Over time, it has gradually moved users to higher-value plans through bundled services and data-heavy packs. A broad-based tariff hike would lift Jio’s ARPU as well, helping it improve margins while maintaining its large customer base. Analysts expect Jio to follow industry pricing moves rather than act alone, as coordinated increases reduce the risk of customer churn.
Vodafone Idea, however, remains in a more delicate position. The company has been losing subscribers over the past few years and continues to face financial pressure. While a tariff hike would raise revenue per user, it could also lead to short-term subscriber losses, as price-sensitive customers may switch networks. Morgan Stanley notes that such churn is common after tariff increases, but past trends show that the market usually stabilises within two to three quarters. Still, Vodafone Idea’s recovery will depend on how well it balances pricing with network improvement and customer trust.
In 2019, telecom operators raised prices sharply, with hikes ranging from 15 to as high as 50 percent across certain plans. This move came after years of intense price competition that had pushed tariffs to very low levels. In 2021, the increase was more moderate, generally between 20 and 25 percent. Another round followed last year, mostly in the 10 to 20 percent range. Analysts had earlier expected a fresh 15 percent hike in FY26, but that did not materialise, pushing expectations into FY27 instead.
Another factor shaping future pricing is the way 5G services are being offered. Many telecom companies have tied 5G access to higher-priced data plans, often with daily data limits of 2GB or more. As 5G usage grows and new applications emerge, operators may further adjust pricing to reflect higher network speeds and capacity. Morgan Stanley’s report suggests that data monetisation will be a key driver of ARPU growth in the coming years, especially as users consume more content and rely on mobile data for a wider range of tasks.
Industry leaders have openly discussed the need for tariff correction. In a recent post-earnings call, Bharti Airtel Vice Chairman and Managing Director Gopal Vittal pointed out that India remains among the lowest markets globally in terms of ARPU and cost per gigabyte. He argued that there is room for more sensible pricing, especially if plans are structured in a way that encourages gradual upgrades from basic to higher-value options. Vittal also highlighted areas such as smartphone adoption, postpaid growth, data usage, and international roaming as future drivers of revenue.
By contrast, Vodafone Idea’s leadership has taken a more cautious tone. The company’s chief executive has stated that any decision on tariff hikes would depend on how market leaders move. While acknowledging that higher prices may be needed, he has suggested that timing and coordination will be critical to avoid further stress on the company’s subscriber base.
