Telecom earnings likely to stay subdued in Q4

Mumbai: Telecom operators are expected to report a largely muted March-quarter performance, with steady underlying growth offset by fewer operating days and rising cost pressures related to energy headwinds, according to brokerage analysts.

Near-term earnings are being weighed down by seasonality, cost pressures and lack of tariff hikes during the quarter. Analysts across brokerages said the fourth quarter of FY26 is likely to be “immaterial” in terms of headline growth, with investor focus shifting to upcoming tariff hikes and the next phase of capital expenditure. The bigger trigger will be management commentary on the next tariff hike, with expectations ranging from a 10-20% increase over the next 3-9 months.

IIFL Securities expects a flattish sequential quarter, as two fewer days will offset gains from 2G-to-4G/5G upgrades, prepaid-to-postpaid migrations and rising data consumption. The brokerage has also trimmed earnings estimates citing pressure on consumer spending and higher energy costs.

Similarly, Morgan Stanley said the quarter is unlikely to move the needle, with attention firmly on tariff hike timelines and FY27 capex outlook. For Bharti Airtel, it expects average revenue per user (ARPU) to remain flat at around Rs 259, with subscriber additions of about 3 million. IPO-bound Jio is also expected to report sustained growth momentum on the back of increasing AirFiber and 5G connections.

Brokerage ICICI Securities also expects steady earnings supported by premiumisation and subscriber additions, though sequential growth will appear muted. It highlighted that Vodafone Idea’s losses could narrow due to lower finance costs following relief on AGR dues, even as Ebitda growth remains constrained by higher network expenses.

Axis Capital echoed similar trends. It expects a 10-12% tariff hike over the next 3-6 months, which could act as a key trigger for the sector. Indus Towers is also expected to post stable earnings, supported by healthy tenancy additions from both Airtel’s rural expansion and Vodafone Idea’s rollout.

Bank of America Securities expects Airtel to deliver a stable performance, with mobile revenues rising about 1.8% sequentially and home broadband revenues growing 8% quarter-on-quarter, driven by FWA expansion. It sees margins holding steady at around 56.8%, with lower capex sequentially. Going ahead, analysts believe the sector is approaching an inflection point, with tariff hikes, rising data monetisation and a potential new capex cycle spanning data centres, 5G expansion and adjacent businesses likely to shape performance in FY27.