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Informist, Friday, Dec. 12, 2025

MUMBAI – Shares of telecommunication companies are likely to rise in the near term, according to technical analysts. The S&P BSE Telecommunication index closed over 1% higher on Friday but closed slightly lower for the week.

Hike in tariff by companies is likely to push average revenue per user higher over a two-year period, head of research at a domestic brokerage, said. "If you take any telecom analyst estimate for the next two years, you'd see that anyone is built in at least a 15-18% kind of a tariff hike," the analyst said. A recent report by JM Financial said that based on its calculations, the industry ARPU needs to grow at compounded annual growth rate of 12% to INR 270-INR 300 by 2027-28 (Apr-Mar) to earn a pre-tax return on capital employed of 12-15% to justify the investment needs of the industry.

The 15-18% tariff hike is expected to push the ARPU to around INR 300 which is required for the industry to have a reasonable return on investments, the analyst said. ARPU of INR 300 is needed to help companies have enough money at hand to invest in 6G technology, the analyst said.

One bad cycle in terms of lower returns could be detrimental for the telecommunication companies, leading to a similar issue when low tariffs led to single digit return on investments that made investments in 5G become a huge challenge for companies. Low tariffs had pushed companies to rely on huge debts to make the required investments.

The industry needs to earn a reasonable return over a long period of time as it needs to be comfortably positioned to look at its next cycle of investment because technology in the industry advances fairly quickly, the analyst added. The public's disposition to pay for new technology is very less, which makes it difficult for companies to capitalise on new technological adoption. This is why companies are trying to maximise their existing cashflow to make investments from their reserves rather than having to rely on debt.

On the topic of Vodafone Idea's adjusted gross revenue, the analyst said the company would require a significant amount of relief to not only deal with the issue of AGR dues but also to carry out its capital expenditure plan. The company also has the added pressure of having to make investments in 5G and at the same time compete with Jio and Airtel, the analyst said.

Shares of Bharti Airtel look good for a decent recovery in the near to short term, Rupak De from LKP Securities said. The stock is expected to face resistance at INR 2,100 and find support at INR 2,050, with momentum likely to improve above INR 2,100. On Friday, shares of Bharti Airtel ended 1.5% higher at INR 2,083.40 on the National Stock Exchange.

Shares of Vodafone Idea indicate a strong breakout and might rise towards INR 14.30 and may find support at INR 10.60, according to De. Shares of Vodafone Idea closed 3.5% higher at INR 11.64 on Friday.

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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Akshat Saksena

Edited by Ashish Shirke

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