INSUBCONTINENT EXCLUSIVE:
MUMBAI: A tariff uptick of upto 50% in the telcom sector may double the industry's operating revenue by next fiscal, said rating agency
The rating firm concluded that revised tariffs will improve the average revenue per user (ARPU)- a key industry metric and every Rs one
increase in ARPU will add to Rs 1000 crore to industry's EBIDTA.
In the last few weeks, Bharti Airtel, Vodafone Idea (VIL) and Reliance
Jio have increased their tariff- a first since 2016,bringing in some positive news for the sector under a debt of more than Rs 7 lakh
crore.
"The steep tariff hikes of up to 50% being implemented by telecommunication companies (telcos) have the potential to double the
This is a structural positive for an industry weighed down by weak cash flows and mounting debt," said CRISIL in its report on Monday.
The
A Supreme Court order on adjusted gross revenue (AGR), which left telcos facing over Rs1.47 lakh in additional government dues, has hit the
Airtel and Vodafone Idea are the worst hit, and are facing over Rs 89,000 crore in dues.
This led to an immediate tariff hike in teh
fiscal 2019.
" given the high operating leverage of the telecom business, nearly 80% of this incremental revenue will flow straight to
With 25% growth in blended ARPU expected, EBITDA could double in fiscal 2021 to about Rs 60,570 crore from Rs 29,450 crore last fiscal ,"
discipline and extent of down-trading from current plans to cheaper ones by subscribers
That will determine the kind of net gains that telcos will make in the near-term," said Sachin Gupta, Senior Director, CRISIL Ratings.
The
50,000 crore in licence-fee arrears by these players
Any additional liability will stretch their balance sheets and necessitate fresh equity infusion and support from sponsors to maintain
credit profiles," said Nitesh Jain, Director, CRISIL Ratings
The top 3 operators had Rs 3.3 lakh crore of debt as on September 30, 2019
