The 2026 telecom shake-up: What's next for Vodafone India, Starlink, and your phone bill?

As India’s telecom sector moves into 2026, the stage is set for major, high-stakes developments. Vodafone Idea Ltd will be under the spotlight, aiming for a turnaround with government support, while satellite broadband player Starlink is set to test new markets in the country.

The success of upcoming spectrum auctions, potential tariff hikes, and the execution of digital infrastructure projects by operators are also likely to significantly influence the sector starting next year, analysts said.

Vodafone Idea's survival

With the government reviewing Vodafone Idea’s adjusted gross revenue (AGR) dues following the Supreme Court order, any relief will be crucial for the company to raise fresh funding, invest in its network, and stabilize its subscriber base in a market dominated by Reliance Jio and Bharti Airtel with a 75% market share.

“AGR relief itself should be a very meaningful shot in the arm, and it should result in Vodafone being able to raise bank funding as well," said Vivekanand Subbaraman, lead analyst for telecom and media at financial solutions provider Ambit Capital. While Subbaraman expected a competitive three-player telecom market to emerge in 2027-28, he saw Vodafone Idea's customer base stabilizing by 2026 end.

AGR represents the income calculated from telecom operators’ total revenues, serving as the basis for regulatory fee payments.

“I expect that the government relief should be forthcoming by March and then maybe fundraising by June 2026 and (network) deployment of that by September 2026," Subbaraman said, adding that once AGR relief is sought, the company will not have a meaningful payment schedule for 2026-27 from a spectrum payment perspective.

Vodafone Idea has guided for ₹50,000-55,000 crore of capex in the near term, contingent on bank funding, which itself requires clarity on AGR. An immediate resolution would unlock ₹25,000 crore of pending bank debt, enabling partial network expansion.

Of Vodafone Idea's ₹2 trillion dues, the AGR dues alone stand at ₹78,500 crore as on September, the company said in a call with analysts in November. The remaining is mostly the amount that the company owes the government for wireless spectrum purchased in auctions. In the absence of any relief from the government, the company would have to shell out ₹18,000 crore annually beginning March 2026 to pay its pending statutory dues.

To be sure, in 2025, the government increased its stake in Vodafone Idea to 49% after it converted spectrum dues worth ₹36,950 crore into equity.

While peer Bharti Airtel too wants the government to reconsider its AGR dues, industry executives said even in the absence of any relief to Airtel, the two telecom operators—Airtel and Jio—will not oppose any relief solely to Vodafone Idea.

“The primary concern is that if the telecom market really shrinks to only two players, the government would adopt a very heavy-handed stance with respect to tariffs and regulations. This would replace the current light-touch approach," Subbaraman said.

Konark Trivedi, founder and managing director of telecom equipment company Frog Innovations Ltd, said, Vodafone Idea’s recovery would mean that the market is going to be competitive, which is good for tariffs, innovation, and the expansion of rural areas. Trivedi, however, expects Vodafone Idea’s recovery to slightly slow down average revenue per user (Arpu) growth for Airtel and Jio.

“Airtel and Jio will differentiate themselves even more in their strategies: offering premium 5G experiences, enterprise private networks, and fixed-wireless access, while at the same time monitoring Vi’s (Vodafone Idea) spectrum and capital expenditure decisions to decide whether to retain their aggressive pricing policy or to move higher up in the value chain," Trivedi said.

Spectrum auctions

While any financial relief would ease Vodafone Idea’s cash outgo, analysts expect the upcoming spectrum auctions to be a muted affair, with limited participation from operators. This is because there is a lot of unutilized capacity currently with the telecom operators. For example, the spectrum in the critical 26GHz band remains unutilized by the operators in the absence of a device ecosystem.

“Operator participation is expected to align closely with renewal obligations, existing spectrum utiliszation and cash-flow priorities. Incremental demand may be concentrated in select sub-GHz and mid-band blocks to enhance coverage or capacity, rather than large-scale acquisitions across bands," said Vinish Bawa, partner and telecom leader at PwC India.

Lately, telecom operators have also called for sharply lowering the base price for the next spectrum auctions and extending the spectrum usage period to as long as 40 years from the current 20 years.

In the upcoming spectrum auction, the Telecom Regulatory Authority of India (Trai) is considering bringing in spectrum in the following bands: 800MHz, 900MHz, 1800MHz, 2100 MHz, 2300MHz, 2500MHz, 3300MHz, and 26GHz for auction.

Besides, it is also looking to put a portion of 6GHz band, 1427-1518MHz, as well as 37-40GHz bands on the block. A total of over 12,000MHz of spectrum is currently unsold in the traditional bands, in addition to the quantity of spectrum that will be brought under new bands, according to data shared by the department of telecommunications (DoT) with Trai.

“The balance sheets of the operators are still under repair, and the acquisition of spectrum will be influenced by three main factors: the location of the heaviest traffic increase, availability of harmonized and ecosystem-ready spectrum, and the speed of the monetization process, especially from enterprise and FWA (fixed wireless access), which is expected to follow," Trivedi said.

In the June 2024 auction, spectrum worth ₹96,238.45 crore was put on the block. Of this, 141.40MHz of airwaves worth only ₹11,341 crore were sold at the reserve price. The ministry of communications said no bidding took place in the 800MHz, 2300MHz, 3300MHz, and 26GHz bands because the monetization of the 5G spectrum auctioned in 2022 was still in progress.

In 2022, the carriers had acquired spectrum worth over ₹1.5 trillion of ₹4.3 trillion worth of airwaves on the block, ahead of the 5G launch.

Starlink's entry

Satellite-based broadband is also expected to reach users in 2026, with Starlink, Bharti-backed Eutelsat OneWeb, and Jio Satellite awaiting spectrum and security clearances for commercial rollout.

While telcos are concerned that these companies, especially Starlink, may eat into their market share by serving urban users, analysts see satellite internet services mostly as expanding the market by serving areas that are unconnected or where the service reliability is very poor.

“It is possible that Starlink might pursue low pricing to showcase success in India because it's one of the largest markets globally," Subbaraman of Ambit Capital said, adding that the price, even if set at ₹2,500, is too high for retail users. According to Subbaraman, enterprise or business users of telecom operators could be more prone to try satellite internet services, but they will also evaluate if they are being served by fibre-based internet.

Earlier in December, Starlink listed a price of ₹8,600 per month with ₹34,000 for hardware. However, the company later removed the pricing, calling it a technical glitch and said it would announce the pricing after securing the spectrum and all regulatory approvals.

“Satellite players will expand broadband availability in remote and enterprise-heavy segments. Their commercial impact on mobile operators is unlikely. SatCom is positioned more as an incremental layer of connectivity than a substitute for nationwide mobile networks," Bawa said, adding that the government needs to avoid overlapping revenue-linked levies and provide long-term visibility on costs.

The call for cost visibility comes as both the department of telecommunications (DoT) and Trai are at loggerheads over spectrum usage charge to be levied on satellite internet companies. While Trai recommended that the companies should pay 4% of their AGR with a ₹500 per user annual charge for serving urban areas, DoT wants to levy a 5% fee and a discount of 1% for serving users in underserved areas.

“Simplification to a single, predictable spectrum usage charge (SUC) structure helps operators plan spectrum usage efficiently while allowing the government to maintain revenue transparency," Bawa said.

Other important regulatory developments next year would be mandatory SIM binding in phones to use communication apps such as WhatsApp, Signal, Telegram, etc. This means a user without an active SIM card in their phone should not be able to use these apps.

The government’s directions have been backed by telecom operators to prevent cyber fraud. However, tech companies have flagged concerns over the government’s directive and asked for public consultations.