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Operating profits of telecom companies in the country are expected to increase by a fifth in the next two years as rates rise and demand for data and value-added services increases, ratings agency CRISIL said in a report on Thursday.
Revenue contribution from data and value-added services could touch 20 per cent in the medium term from 16 per cent in financial year 2013, with big telecom companies seeing data use more than double year-on-year in April-September, said CRISIL. The trend is expected to continue following a doubling of smartphone sales and higher 3G reach after prices were cut.
The average realised rate a minute (ARPM) for big companies stabilised in FY13. In April-September, ARPM has risen around five per cent after rates were increased in some circles. Sudip Sural, senior director, CRISIL, said in the report: “Our estimates show there is still a 50 per cent gap between headline tariffs and ARPM due to discounted call rates offered to many subscribers. With competitive intensity easing, telecom companies are in a better position to reduce the discounts and crunch the gap.”
This will contribute about half of the increase in operating profits.
The agency also sees pricing power sustaining over the next two-three years.
Revenue contribution from data and value-added services could touch 20 per cent in the medium term from 16 per cent in financial year 2013, with big telecom companies seeing data use more than double year-on-year in April-September, said CRISIL. The trend is expected to continue following a doubling of smartphone sales and higher 3G reach after prices were cut.
The average realised rate a minute (ARPM) for big companies stabilised in FY13. In April-September, ARPM has risen around five per cent after rates were increased in some circles. Sudip Sural, senior director, CRISIL, said in the report: “Our estimates show there is still a 50 per cent gap between headline tariffs and ARPM due to discounted call rates offered to many subscribers. With competitive intensity easing, telecom companies are in a better position to reduce the discounts and crunch the gap.”
This will contribute about half of the increase in operating profits.
The agency also sees pricing power sustaining over the next two-three years.
