India’s telecom leaders are entering a new era of value creation. [Photo: AI Generated]
India’s major telecom firms are shifting gears. Bharti Airtel and Reliance Jio are moving beyond just connectivity. They are focusing on premium customers, home broadband and enterprise digital services. A research note by ICICI Securities highlights this transition.
The push into 5G is enabling a shift to higher-value plans. ICICI says the unlimited 5G plans used to begin at 1.5 GB/day until July 2024. Now, many have moved to 2 GB/day, and the trend could go to 2.5 GB/day or more. “It can keep moving up to being a 2.5 GB per day plan and so on, making premiumisation a secular trend for telcos,” the note states.
Analysts expect the 5G upgrade to push tariffs 17–30 % above 4G levels in the next 3-4 years. For example, Jio’s average revenue per user (ARPU) was ₹211.4 at the end of September, up from ₹208.8 in June. Airtel leads with an ARPU of about ₹250 at the end of June.
The Total Addressable Market (TAM) for these operators is widening. Fixed-broadband, enterprise solutions (cloud, AI, cybersecurity), managed services, and SaaS are now key growth areas.
For instance, Jio is pushing fixed-wireless access (FWA) broadband aggressively — earlier research indicated Jio may become a global leader in FWA by mid-2025.
Airtel has partnered with companies such as Perplexity (generative AI) and Google LLC for AI data-centre initiatives.
ICICI Securities assigns a valuation of US$148 billion to Jio by September 2027. For Airtel, a target stock price of ₹2,400 has been set, reflecting improved fundamentals.
On return on capital employed (RoCE):
These improvements stem from a drop in spectrum-net block (as % of gross block) and lower incremental capex since major spectrum renewal only arrives around FY30.
These telcos are building digital ecosystems — not just offering connectivity, but bundled services, AI-powered platforms, data-centres, and enterprise solutions. That means their competition isn’t just other telcos, but cloud providers, SaaS players and niche digital service firms.
This ecosystem approach raises switching costs for customers and opens new revenue streams beyond subscriber growth. Over the next 3-4 years, monetising this ecosystem may be the key differentiator.
Consumers: Expect higher-tier plans, faster rollout of 5G, more bundled services (AI, cloud, smart-home). Entry-level plans may see fewer benefits or be phased out.
Investors: The telecom sector may move into a “value-creation” phase after many years of “capital destruction”. The improved RoCE, free cash flow and diversification make the sector more attractive.
Market watchers: The impending Jio IPO and improved valuations across the sector may trigger further re-rating of telecom stocks.
After years of low returns and heavy investment, Airtel and Jio are poised for a transformation. Higher-value 5G plans, broadband and enterprise digital services are unlocking new revenue zones. With valuations and returns set to rise, the Indian telecom industry may be on the verge of a sustained uptick in profit and shareholder value.
