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Telecom: Airtel and VI promoters’ increase stake as market awaits next round of tariff hike

ICICIdirect Research 22 May 2026 DISCLAIMER

Q4FY26 Performance: The Average Revenues Per User (ARPU) of Airtel was at ₹ 257, up ~4.9% YoY, amidst no tariff hike in base. Similarly, Vodafone Idea’s (Vi) ARPU was up 6.1% YoY at ₹ 163. Both companies focussed on improving the margins which were up 45 bps and 50 bps YoY, respectively. The focus now shifts to tariff hike (last hike was in July, 2024), which we believe will be in H2FY27 next time. Also, given the commentary of the players, we believe tariff hike, might be layered and more towards high data pack users.
Promoters stake increase: Bharti Airtel promoters swapped their stake in Airtel Africa with stake in the parent company increasing their stake in Airtel by 2.4%. They also stated that they have long-term ambition to secure a majority stake (51%) in Bharti Airtel through Bharti Telecom (BTL) which currently holds a 40.5% stake in Bharti Airtel. Aditya Birla Group has committed an equity infusion of $500 million or ₹ 4,730 crore into Vi via the issuance of warrants on preferential basis.
Vodafone looking at revival; fund raise key monitorable: During Q4, Vi secured Adjusted Gross Revenue (AGR) relief when the DoT reduced its total liability from ₹87,695 crore to ₹64,046 crore, along with deferred payments. The present value of the benefit is close to ₹57,000 crore. With promoter fund raise and AGR relief done, Vi will look to raise debt (₹64,046 crore) to launch and expand 5G and 4G, which will be key monitorable along with industry tariff hike as it is targeting a double-digit revenue growth and triple its EBITDA in three years.
Our view: Airtel continues to maintain its relative strength among peers in a consolidated industry with the industry leading ARPU, wireless margins and free cash flows (~₹ 56,600 crore in FY26) with further confidence shown by promoters by indicating stake increase. Thus, it is our preferred pick in our coverage with a target price of ₹ 2,350. For Vodafone Idea, after a sharp move (42% in last one month), focus will now be on actual improvement in metrics.

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