UBS has cited a challenging macroeconomic environment and persistent inflationary pressures as the key factors behind their cautious stance.
The brokerage warns that market consensus regarding a mobile tariff hike in FY27 may be overly optimistic, particularly as sector revenue growth has shown signs of slowing, recording approximately 8% year-on-year growth in the fourth quarter of financial year 2026.
Here’s UBS’ stance on various telecom stocks:
Indus Towers
UBS has downgraded Indus Towers to “sell” from its earlier rating of “neutral” and cut its price target to ₹395 from ₹495 earlier. The revised price target implies a downside potential of 7% from current levels.
The brokerage has cut Indus Towers’ Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and Dividend Per Share estimates, expressing concern over the potential non-renewal of tenancies outside of Bharti Airtel and Vodafone Idea.
Additionally, elevated capital expenditure—driven by investments in Africa, tower relocations, and renewable energy initiatives also weighs on their outlook. With a dividend yield projected to be between 3% – 5% for the next few years, UBS finds the current value proposition unconvincing.
Bharti Airtel
UBS is one of the three analysts that have a “sell” rating on Bharti Airtel, having also cut its price target to ₹1,800 from ₹2,030 earlier. It is the lowest price target on the street for the telecom service provider.
The brokerage has trimmed its mobile revenue estimates for Bharti Airtel by 2% – 4%. While they assume a 10% price increase in the third quarter of this fiscal, they acknowledge a significant risk that this hike could be delayed until FY28.
Vodafone Idea
UBS has maintained its “neutral” rating on Vodafone Idea with a price target of ₹15.
The revision in revenue estimates for Vodafone Idea is relatively minor, as the brokerage expects recent subscriber base stabilization to support an accelerated migration from 2G to 4G services, potentially providing an upside to Average Revenue Per User (ARPU).
Why Are Telecom Stocks In Focus
Earlier, the Bombay High Court ruled in favour of telecom companies in the One Time Spectrum Charge matter, stating that the centre has not been able to justify the decision of levying the One Time Spectrum Charge retrospectively. Therefore, it asked the centre to return bank guarantees to both Bharti Airtel and Vodafone Idea.
The combined relief for both these companies on this matter is said to be nearly ₹20,000 crore.
Shares of Indus Towers are trading 0.4% lower at ₹424.4. Shares of Vodafone Idea are trading 1.7% higher at ₹14.64, while those of Bharti Airtel are down 0.2% at ₹1,809.6.
