Telecom Industry to See Healthy Revenue Growth in FY23: Report


Price hikes along with continued increases in data usage are expected to accelerate telecommunications industry revenue growth in FY23.

The sector has been riddled with debt due to complications such as the verdict in the Adjusted Gross Revenue (AGR) case, which resulted in huge immediate liability on the books of telecom operators.

“While the pandemic had a bad influence on other sectors, surprisingly, it turned out to be a boon for the telecom sector as businesses depended on telecom operators for the smooth running of their operations,” Brickwork said. Ratings (BWR) in a press release. report.

“It ultimately contributed to steady growth in key industry metrics such as ‘ARPU’ and ‘MOU’.”

According to the report, the sector’s difficult situation may ease in the future, as price hikes and a continued increase in data usage will lead to a 6-8% increase in revenue in FY22.

Also, the shift of subscribers to 4G network is imminent due to increased need due to work and education being done from home, which in turn will lead to an increase in the company’s total revenue.

Notably, wireless data usage grew an average of 37% year-over-year in Q2FY22.

In addition, the report indicates that the recent increase in tariff plans from 20 to 22% would help improve the viability of the sector.

“The telecom sector in India is dominated by three major players and is highly competitive in nature, which makes price hikes a rare occurrence. to face the financial crisis and to allow investment for the 5G network.”

“However, the flip side is that price increases can hinder subscribers switching from 4G to 2G.”

Currently, about 44% of telecommunications subscribers come from rural areas and therefore price increases could discourage increased use of telecommunications services.

Additionally, he pointed out that due to the pandemic, educational institutions and NGOs are heavily dependent on telecom operators for their reach, which may not be as significant after the lifting of the lockdown, which is imminent with a increased vaccination coverage.

Additionally, the agency expects telecom carrier EBITDA margins to improve in FY22 due to price increases and increased data usage.

“Rate increases of 20-22% in November 2021 would result in increased FY22 revenue, the full effect of which would be seen in FY23.”

“Costs for telecom operators should also fall, given the revision of the definition of AGR and the other reductions announced by the government.”

Recently, the Ministry of Telecommunications has already released bank guarantees of Rs 9,200 crore deposited earlier by telecom operators, thereby improving the liquidity available to them and reducing financial costs.

“This, coupled with the increase in revenue, would help increase the overall profitability of the sector.”



(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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