Indian telecom in FY26 — The year to pivot from scale to value

India’s telecom sector enters FY26 from a position of structural strength.

Nationwide 5G coverage is established. Tariffs have stabilised. Competitive intensity has been rationalised. Regulatory clarity has improved with the Telecommunications Act, 2023. Union Budget 2026 has reinforced digital infrastructure as a core economic enabler, with continued emphasis on semiconductor manufacturing, data centre development, and digital public infrastructure.

At the same time, India’s global trade alignments are accelerating supply chain diversification in electronics and telecom equipment.

The industry has built scale. FY26 is about unlocking the value from the scale.

The strategic shift — From coverage to capital efficiency
Globally, the 5G investment cycle is peaking. According to GSMA Intelligence, (https://www.gsma.com/solutions-and-impact/connectivity-for-good/mobile-economy/the-mobile-economy-2024/) global operator CapEx as a percentage of revenue has started to normalise post the initial phase of 5G rollout. In mature telecom markets, the focus has shifted from coverage to monetising and efficiency.

India stands at a similar inflection point.

With more than 1.2 billion mobile subscribers and one of the world’s highest per capita data usage, it is no longer about scale. The strategic imperative is return on capital.

Global benchmarks are instructive—leading developed market telcos typically deliver return on capital employed (RoCE) in low to mid-teens, while Indian operators have been operating below that threshold. This gap needs to be bridged.

FY26 should be about focusing on disciplined capital allocation and margin expansion.

1. Scaling enterprise monetisation: Enterprise connectivity and digital solutions are the fastest-growing revenue pools in the world. GSMA (https://www.gsmaintelligence.com/) estimates that enterprise services could bring as much as 30% of incremental growth in operator revenue globally over the next five years.

Global telcos have made private 5G and IoT-enabled solutions a key part of their enterprise strategy in the automotive, manufacturing, and logistics sectors. Industrial growth in India that results from Production Linked Incentive (PLI) schemes and realignments of trade offers a similar opportunity.

As global trade agreements accelerate diversification of the production base to India, secure private networks, low-located industrial connectivity, and an integrated form of cloud-edge frameworks will be needed to scale. Enterprise monetisation in FY26 therefore has to go beyond pilots. Industry vertical playbooks, outcome-based pricing, and integration capabilities will determine scalability.

2. Shaping the digital stack: Global experience shows a very clear structural risk—value is migrating upwards to platforms.

Cloud players are now a growing share of enterprise IT spending. Hyperscaler CapEx was $150 billion-plus of global CapEx in 2023 as per the disclosures of companies and industry estimates, indicating their scale advantage.

Leading global operators are repositioning themselves with increased network API exposure and cloud partnerships to add connectivity to application layers within an enterprise. For Indian operators, the lesson is clear.

FY26 should focus on:

• API-driven network capabilities
• Programmable enterprise connectivity
• Co-innovation models with hyperscalers that preserve customer base

The objective is not to compete with cloud players but to become indispensable in the digital value chain.

3. Infrastructure as a strategic assets class: Digital infrastructure has already become a distinct investment class around the world. As per industry research, data centre capacity is expanding at double-digit rates due to the increasing workloads of AI and cloud requirements. India is one of the fastest growing data centre markets in the world.

Tower and fibre specialisation has unlocked capital efficiency.

Global trade agreements are expected to make equipment flows and R&D collaboration easier, reducing input frictions for network expansion. Simultaneously, the diversification of supply chains makes India attractive as a trusted telecom manufacturing hub.

FY26 must emphasise structured capital recycling, InfraCo optimisation where relevant, and alignment of infrastructural expansion and enterprise demand corridors. Infrastructure discipline will essentially define balance sheet strength.

4. AI as a profitability multiplier: AI’s financial impact on telecom can be significant. Network-related opex expenses can be cut sizeably with the help of AI-based automation in telecom operations. Network autonomy with predictive maintenance and energy optimisation, especially in large-scale 5G networks, offer promising potential for savings. For Indian operators operating large network footprints, mid-single digit opex reduction proves to be a huge margin expansion.

The industry should now institutionalise AI within core operating models rather than positioning it as an experimental overlay.

5. Converting policy and trade stability into strategic advantage: The Telecommunications Act, 2023, has provided foundational clarity. Investment in digital infrastructure and support for the semiconductor ecosystem is a good signal of long-term commitment by states.

As India broadens its global trade relations, telecom lies at the intersection of trusted networks, digital sovereignty, and industrial policy. However, spectrum pricing discipline, execution of right of ways, and SatCom coordination remain execution priorities.

FY26 offers rare macro alignment: regulatory stability, industrial expansion, and global supply chain repositioning. Telecom leadership must leverage this alignment decisively.

The real opportunity in FY26
India has developed one of the largest and affordable digital highways in the world.

Global experience indicates that operators who successfully pivot towards enterprise solutions, infrastructure optimisation, and efficiency through AI can deliver structurally stronger returns.

FY26 is not about incremental roll-out. It is about recalibrating strategically. The infrastructure base is strong, budget direction is supportive, and India’s trade alignments are favourable. The telecom industry should evolve from being scale champions to high-return digital infrastructure orchestrators.

Moving from scale to sustained value creation is now achievable.

Anupam Chaturvedi, Associate Director – Telecom Sector, also contributed to this article