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Less capex needs, rising revenues lift telcos’ hope

With capital expenditure requirements falling and tariffs stabilising, the Indian telecom sector’s fortunes finally seem to be looking up.

Published: 03rd October 2019 01:58 AM  |   Last Updated: 03rd October 2019 09:17 AM   |  A+A-

Express News Service

NEW DELHI:  With capital expenditure requirements falling and tariffs stabilising, the Indian telecom sector’s fortunes finally seem to be looking up.According to analysts, not only has there been steady improvement in gross revenue during the past few months, but the peak capex cycle for 4G network roll-outs is now in the past.“During FY2019, the industry incurred a capex of more than `1 lakh crore. Such a high capex... led to pressure on company balance sheets,” noted Ankit Jain, assistant vice president, Corporate Ratings, ICRA. 

However, with 4G capex needs past their peak and investment in 5G still some way away, the current fiscal year is expected to see a turn in fortunes. “Capex levels are expected to witness temperance to around `65,000 crore for FY2020, which coupled with steady improvement in sales post the uptick in average revenue per user (ARPU) levels would result in a decline in capex intensity to around 30-35 per cent..,” Jain said.

According to quarterly financial performance data from the Telecom Regulatory Authority of India (TRAI), the quarter ended June 2019 has seen a robust 8.8 per cent quarter-on-quarter growth in the industry’s overall adjusted gross revenues (AGR) to `39,124 crore, the highest growth since Jio’s wireless mobile services foray three years ago, compared to a decline of 0.34 per cent in March 2019 and 0.24 per cent in December 2018.

But, most of this improvement is being seen in the top two players ­—Bharti Airtel and Reliance Jio — with Vodafone Idea’s high debt levels expected to make things tough for the company. 
While Jio’s AGR grew 9.77 per cent sequentially and Airtel’s by 26.15 per cent, Vodafone Idea recorded a 5.78 per cent drop.



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