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Andrew Bonwick
Vice President of Product Development at Relm Insurance
Madhav Sheth
CEO of Ai+ Smartphone
Stephen Rose
CEO Render Networks
Reliance Jio, Airtel and Vodafone Idea will have to substantially increase their average revenue per users (ARPUs) to achieve long-term sustainability at a time when the sector is going through a rough financial phase in the wake of AGR-related payment issue.
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ICRA said that these telcos need to increase their ARPU annually by 13-30% to be able to meet the AGR related payouts along with the existing debt repayments as well as the spectrum instalments which will start from FY2023.
Brokerage Motilal Oswal said that each player needs an ARPU hike – VIL needs to survive, Jio needs to justify its high valuations in the recent investments and Bharti needs to deleverage.
Industry ARPU needs to reach Rs 200
ICRA said that the telecom industry ARPU would have to increase to Rs. 200 in the medium term for viable operations and thus, further tariff hikes cannot be ruled out. The December tariff hikes have resulted in steady ARPU improvement in the market.
The sector recovery is also substantiated by deleveraging measures undertaken by telcos and moderation of capex intensity, the uncertainties around the AGR issue persist.
Motilal, in its note, said that near-term economic headwinds and history of the last ten years do not paint a pretty picture for the telecom industry; however, lately, the market construct has turned highly favourable. “Nevertheless, any tariff hike is possible only if there is a collective effort on the part of all telcos,” it added.
