India Only Market in Asia With Declining Revenue Due to Intense Competition: Moody’s

India’s telecom industry is the only market in Asia where industry-wide revenue is declining due to unprecedented price competition spurred by a new entrant, Reliance Jio, Moody’s Investors Service said in its latest report. In the other emerging countries, the revenue growth of about 3.5% in 2018 is expected, which is lower than forecast GDP growth of approximately 5.8%.

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The Indian telecom industry currently has a Baa3 positive rating from Moody’s.

Moody’s said that revenue growth in the developed markets in the region would remain in line with expected GDP growth of around 1.5%.

The agency said that the outlook for the telecommunications industry in Asia Pacific is stable, but will also face headwinds from technological changes.

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“Three factors drive the stable outlook; expectations of year-on-year average revenue growth of about 2.0%-2.5% over the next 12-18 months; EBITDA growth of 0%-2%, although average margins will contract slightly next year; and CapEx — as a percentage of revenue — remaining elevated at around 25%,” Nidhi Dhruv, Moody’s Vice President and Senior Analyst, said in a statement.

“However, organic revenue growth is slowing, although the pace varies by country, due to increasing mobile penetration rates, ongoing competition, and technological headwinds,” Annalisa Di Chiara, Moody’s Vice President-Senior Credit Officer, said in a statement.

Overall for the region, the average EBITDA margin for Moody’s-rated telecommunications companies in Asia Pacific will contract to around 39%-40% over the next 12-18 months, reflecting intensifying competition, higher costs for providing data services, and investments in margin-dilutive digital businesses.