The rise in telecoms tariffs along with the recent back-up plan provide sufficient leeway for the industry to undertake debt deleveraging as well as investment funds to upgrade 5G technology, the agency said on Wednesday. ICRA rating by revising the outlook for the telecommunications services sector from “stable” to “negative”.
The rise associated with the constant upgrade of 4G subscribers from 2G and the increase in the use of telephony services is expected to lead to an improvement in the industry’s ARPU (average revenue per user) at around Rs 170 by the end of 2022-2023, he said.
The telecommunications industry has implemented the long-awaited tariff increases that have the potential to improve industry ARPU levels to around Rs 170 by the end of 2022-2023, according to ICRA.
“This will translate into increased profit generation, which, together with the government-announced relief plan, will provide enough leeway for the industry to undertake deleveraging as well as capital spending (capital spending) for the technological upgrade to 5G, ”the agency said.
Sabyasachi Majumdar, Senior Vice President and Group Head (Corporate Ratings) of ICRA Limited, said the latest round of rate hikes, in which carriers have raised prepaid rates by around 20% , will provide much needed traction at ARPU levels.
“We expect industry revenues to grow 18-20% in 2022-2023, followed by 10-12% growth in 2023-24, which, given the high operating leverage, is expected to increase. translate into a healthy expansion of operating activities. profits, the same are expected to increase by around 30% in 2022-2023, ”he said.
“While the moratorium on dues would impact the government’s non-tax revenue from the telecommunications sector, two telecom operators have prepaid their dues for past spectrum auctions totaling Rs 26,300 crore, offsetting the loss for the government ‘ICRA added further.
For 2021-2022, the telecommunications sector is expected to contribute around Rs 54,000 crore to government non-tax revenue, which will be close to the budgeted estimate for the year, he said.
Debt, however, continues to remain the “Achilles heel” of the industry, he warned.
ICRA expects industry debt levels to remain at around Rs 4.7 lakh crore as of March 31, 2022, before declining to Rs 4.5 lakh crore as of March 31, 2023.
“Telecom operators have focused on deleveraging and Bharti Airtel recently completed its rupee 21,000 crore rights issue and raised 25% as an upfront payment, while Vodafone Idea is also seeking fundraising,” said ICRA in a press release.