VI, Airtel: Telecom stocks back in vogue, sector valuation premium hits 17%; here's why

The telecom sector, long overlooked by investors, is witnessing renewed interest. The sector's EV/Ebitda has climbed to 10.5 times by September end, reflecting a 17 per cent premium over its 10-year historical average of 9 times. Analysts tracking the sector said Bharti Airtel’s strong financial performance, favourable developments at Vodafone Idea (VI), and expectations of a potential Jio listing next year have collectively revived sentiment toward the space. Add to that, net wireless subscribers are rising, with additions standing at 34 lakhs in September, as per TRAI’s data.

Vodafone Idea (VI) shares are up 19.73 per cent in 2025 so far. Bharti Airtel has soared 32.59 per cent over the same period. Recently, Vodafone Idea said it keeps exploring various opportunities and options to raise funds within the authorisations given by the board. As and when such proposals are considered by the board of directors that warrant disclosures, the company complies with the disclosure obligations under the SEBI, Vodafone Idea said while clarifying on reports of a potential $4-6 billion investments by TGH.  

MOFSL noted that the Supreme Court has permitted the government to review Vodafone Idea's AGR dues. This move offers the government a chance to create a plan for the telco's long-term survival. This could lead to a partial waiver or payment extension, it noted.

Emkay Global said the SC's recent decisions are a step towards creating a more competitive telecom market in India. "We note that leverage for VI remains higher even without AGR dues, and the government will need to consider plans toward reducing the spectrum debt as well," Emkay Global said. 

ICICI Securities in a note on October 23 upgraded the telecom sector outlook, citing an improved tariff structure, renewed push for 5G adoption and JPL’s likely listing in H1CY26. Jio's IPO and relatively higher valuations should benefit the entire sector, it suggested. 

Kotak Institutional Equities also believes the market construct for the telecom operators to remain favorable, with a reduction in capex intensity and uptrending average revenue per user (ARPU), aiding strong earnings and free cash flow (FCF) growth. 

"GoI review of AGR dues and BSNL’s network rollout remains the key monitorable in the near term. Bharti Airtel is the best direct play. Retain ADD," it said.

Meanwhile, Starlink is preparing to launch satellite communication services in India. The company plans to establish nine gateway earth stations across the country. 

"Strict security measures are in place, with only Indian nationals permitted to operate the stations. Starlink must adhere to data storage and terminal deployment regulations," MOFSL noted.