Bharti Airtel, India’s leading telecom carrier will have a revenue growth of 8-10 percent over the next 12-18 months on strong demand for data services and affordable smartphones, Moody's Investors Service said in its outlook for the Asia Pacific telecommunications industry.
Bharti and Vodafone are increasing their 4G capex spending ahead of the 4G launch of Mukesh Ambani-owned Reliance Jio, Moody’s said, adding that the capex of these incumbent telcos for the current year will increase on upfront payments related to March 2015 spectrum auctions. Moody’s expect Bharti Airtel's adjusted capex/revenue to peak to about 40 percent in 2015 from 28.4 percent in 2014, and then to decline to a more normalised level of around 24-25 per cent in 2016. The firm also said that Reliance Communications (RCOM) capex will decline once its network-sharing agreements with Reliance Jio start kicking in by mid-2016.
Moody's Investors Service said its outlook for the telecommunications industry in Asia Pacific over the next 12-18 months is stable, reflecting the sector's revenue growth from data services, steady EDITDA levels and strong liquidity profile.
"The average revenue of Moody's-rated telecommunications companies in Asia Pacific will increase by 3%-4% year-on-year over the next 12-18 months, similar to the 3.8% growth seen in 2014, and trending in line with Moody's forecast average GDP growth for the region," Nidhi Dhruv, a Moody's Assistant Vice President and Analyst, said in a statement.
Moody's report said that over the next 12-18 months, revenue growth rates will register 1%-2% in developed markets such as Singapore, Australia, Japan and Korea. By contrast, emerging markets such as China, India, Thailand and Indonesia will see growth rates of 5%-6%.
"As for aggregate adjusted EBITDA, the result will remain stable in 2016 as against levels seen in 2014, but average EBITDA margins will decline marginally. Leverage will remain at current levels, because of higher capital spending on 3G/4G network improvements, but liquidity will remain strong,” Dhruv added.
The slower growth in developed economies reflects the maturity and high tele-density of these markets, while the higher growth in emerging markets will be driven by increasing smartphone penetration and data consumption, the report said.
The report further added that the companies' revenue growth will remain broadly in line with their home countries' GDP growth rates, given the domestic focus of their businesses.