SummaryIn this article, an exponential companding (EC) scheme, which can reduce PAPR without raising the average output power level, is proposed for universal filtered multi carrier (UFMC) signals. However, EC scheme degrades the BER performance. Therefore, an optimal nonlinear companding transform named as “modified exponential companding” (MEC), which can use two companding levels based on a threshold value, is proposed. The proposed MEC scheme shows enhanced PAPR and BER performances than EC scheme. Moreover, the MEC provides more design flexibility and freedom with an unchanged average output power level. Furthermore, a hybrid scheme is also proposed to improve PAPR performance, where clipping operation is employed on MEC signal based on an appropriate clipping threshold. Simulation results illustrate that proposed MEC scheme offers improved system performance with a net gain of 7.22 dB than conventional EC and μ‐law techniques. Besides, the proposed hybrid scheme with clipping ratio 1.3 proffers enhanced PAPR reduction of 8.85 dB and improved net gain of 7.95 dB. Also, the proposed EC, MEC, and hybrid schemes can provide lesser spectrum side‐lobe levels than μ‐law. Finally, the UFMC system with the proposed hybrid scheme is verified by employing wireless open‐access research platform (WARP) as hardware over real‐time channel.