Synopsis: Bharti Airtel’s strong operating performance and deeper exposure to Indus Towers strengthen the investment narrative. With Jio’s IPO expected to improve tariff discipline, as Jefferies sees strong sector growth ahead.
India’s telecom sector is at an inflexion point, supported by improving fundamentals, rising data consumption, and better tariff discipline. With 5G adoption accelerating and regulatory overhangs easing, brokerages expect a gradual sector re-rating driven by stronger cash flows and healthier balance sheets.
Against this backdrop, Bharti Airtel and Indus Towers have emerged as Jefferies’ top picks. Airtel’s strong operating momentum and Indus’ stable infrastructure-led model, backed by Airtel’s expansion, position both well to benefit from tariff hikes, AGR relief, and a structurally improving industry outlook. Here are the stocks of the Telecom sector with reiterated targets by Jefferies
Bharti Airtel Ltd
Bharti Airtel Ltd is one of the world’s leading providers of telecommunication services, with a presence in 18 countries, including India, Sri Lanka, and 14 countries in Africa. It has emerged as a top pick by Jefferies in the telecom sector due to its multiple growth levers and strong FCF visibility. The global Investment bank has raised its target to Rs. 2,760 per share, an upside of around 38 percent from Thursday’s close price of Rs 1,988 per share.
Strong customer base: The company serves approximately 624 million customers across 15 countires, representing a 10.7 percent year-on-year increase. Network usage remained strong, with voice minutes increasing 4.6 percent and data traffic surging 27.7 percent. Consolidated revenues grew 16.1 percent to Rs 521.5 billion, while India revenues increased 10.6 percent to Rs 386.9 billion.
Strong ARPU momentum: In the mobile segment, customer quality continued to improve. Airtel added 1.4 million revenue-earning users and 5.1 million smartphone data customers, with postpaid contributing a healthy 68 percent of net additions. ARPU rose to Rs 256, supported by upgrades, data monetisation, and a strong rise in international roaming usage.
5G expansion and adoption: The company’s 5G rollout remains firmly on track. We closed the quarter with 167 million 5G users as device shipments and affordability improved. Network usage continues to scale, with 5G now carrying over 40 percent of total traffic, reflecting growing adoption, stronger coverage, and sustained gains in shipment share.
FCFF Visibility: EBITDAaL (Earnings Before Interest, Taxes, Depreciation, Amortisation, and after Lease expenses) was robust, and after deducting capex of about Rs 7,200 Crores, Airtel still generated Rs 10,750 Crores of operating free cash flow. This shows that core operations consistently produce surplus cash beyond investment needs.
Airtel’s Nxtra investments of Rs 1,500 crore every year are backed by 20–25-year firm contracts, ensuring predictable and recurring inflows. This locks in visibility of future cash generation from adjacencies beyond mobile services.
Indus Tower
Indus Towers Limited is engaged in the business of, inter alia, setting up, operating and maintaining wireless communication towers. Indus Towers Limited was formed by the merger of Bharti Infratel Limited and Indus Towers. This combined strength makes Indus one of the largest telecom tower companies in the world. The global firm Jefferies has maintained its target at Rs. 510 per share, an upside of around 23 percent from Thursday’s close price of Rs 414.2 per share.
It has over 256,074 towers and 415,717 co-locations (30th September 2025) and a nationwide presence covering all 22 telecom circles. Indus’ leading customers are Bharti Airtel (together with Bharti Hexacom), Vodafone Idea Limited and Reliance Jio Infocomm Limited, which are the leading wireless telecommunications service providers in India by revenue.
Subsidiary of Bharti Airtel: The company’s largest shareholder with a 52.03 percent stake in the company. Airtel is one of Indus Towers’ largest customers, and its aggressive 4G/5G rollouts directly translate into higher tower additions and co-locations for Indus. In Q2 FY26, Indus added over 4,300 macro towers and 4,500 co-locations, much of which was driven by Airtel’s expansion.
Seeing strong growth opportunities in Africa, Indus Towers plans to enter markets such as Nigeria, Uganda, and Zambia. Backed by its solid balance sheet and the strategic relationship with parent Bharti Airtel, the company aims to diversify revenues, scale operations, and build long-term value alongside Airtel’s footprint.
Industry Overview: Jefferies sees Jio’s potential IPO in 2026 as a major turning point for the telecom sector. As a dominant industry player, Jio’s listing could improve the overall tariff environment, bring greater investor focus to the space, and act as a catalyst for higher valuation multiples across listed telecom companies.
Relief on AGR dues could meaningfully improve Indus Towers’ financial flexibility and long-term growth outlook. Lower regulatory stress on telecom operators is likely to strengthen their balance sheets, enabling steadier network investments and improving tenancy visibility for tower companies over the medium term.
Looking ahead, expected tariff hikes around June 2026 may lift operator revenues, translating into healthier rental flows for Indus. With capital expenditure largely stabilising, incremental revenue growth should flow through to stronger free cash generation, improved return ratios, and a more resilient earnings profile.
Overall, Bharti Airtel and Indus Towers emerge as compelling plays on India’s improving telecom cycle. Airtel’s consistent ARPU expansion, strong free cash flow visibility, and rapid 5G adoption position it well for sustained earnings growth, while Indus Towers offers stable, annuity-like returns backed by Airtel’s expansion, potential AGR relief, and future tariff hikes. Together, they provide investors a balanced exposure to both growth and infrastructure-led stability, reinforcing Jefferies’ positive sector outlook.
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