UBS turns cautious on India telecom sector; Downgrades Indus Towers to Sell, cuts Airtel estimates

Global brokerage firm UBS has maintained a cautious outlook on India’s telecom sector, citing risks to consensus expectations of mobile tariff hikes and slowing revenue growth across the industry.

According to UBS, the market’s expectation of a roughly 15% mobile tariff increase in Q2FY27 appears unlikely. The brokerage now assumes a more modest tariff hike of around 10% in Q3FY27, while also highlighting the possibility that any increase could be delayed further into FY28.

Revenue Growth Expected to Slow

UBS expects sector revenue growth to moderate significantly, projecting growth of less than 8% year-on-year during Q4FY26. The brokerage believes the slower growth environment could weigh on earnings expectations across telecom operators.

As a result, UBS has reduced its mobile revenue estimates for Bharti Airtel by 2% to 4%.

The brokerage also lowered its assumptions for Airtel’s average revenue per user (ARPU) growth, now forecasting a 7% CAGR between FY26 and FY29, compared with its previous estimates.

Indus Towers Downgraded to Sell

UBS downgraded Indus Towers to “Sell” and set a new target price of ₹395 per share.

The brokerage cited concerns around sector growth trends and tariff-related uncertainties that could impact long-term earnings expectations.

Airtel and Vodafone Idea Target Prices Revised

UBS lowered its target price on Bharti Airtel to ₹1,800 per share while maintaining its “Sell” rating on the stock.

For Vodafone IdeaUBS raised the target price to ₹15 per share but retained its “Neutral” rating.

Dividend Expectations Reduced

The brokerage also cut its FY27-FY29 dividend per share (DPS) estimates by 19% to 36%. UBS said the revisions reflect a more conservative outlook for sector earnings and could result in dividend expectations falling short of current market assumptions.