Even after the tariff hikes, competitive pressure for telecom operators remains elevated, India Ratings and Research (Ind-Ra) has said in its latest credit news digest.
The industry revenue increased by 9 per cent quarter-on-quarter Q3 FY20 supported by tariff hikes, which has more than offset the decline in the subscriber base in the given quarter.
After almost two years, revenue grew across all the major telcos. However, Ind-Ra said this momentum needs to be monitored. This is because apart from tariffs, revenue depends on subscriber base which declined in November and December 2019.
Moreover, even after the tariff hikes, the competitive pressure for telcos remains elevated since Reliance Jio Infocomm's data tariffs are still 25 per cent lower than those of Bharti Airtel and Vodafone Idea.
Ind-Ra said the recent tariff hikes have resulted in an increase in average revenue per user (ARPU) of all three major telcos in the range of 2 to 7 per cent quarter-on-quarter.
The share of broadband subscribers in the overall subscriber base is also on a continuous rise. The rising share of data subscribers along with growing data traffic and stabilising data tariffs augurs well for revenue growth.
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Additionally, Ind-Ra opined that the release of a consultation paper by Telecom Regulatory Authority of India to evaluate setting up floor prices for telecom tariffs and extension of the implementation of zero interconnect usage charge regime by a year are positive moves for the telecom industry.
However, Ind-Ra said Vodafone Idea does not have the ability to pay adjusted gross revenue (AGR) related dues by March 17, given the lack of clarity on promoter equity infusion, severe erosion in refinancing flexibility and insufficient cash balance (Rs 12,500 crore as of December 2019).
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