Airtel, Vi Should be Happy With Rs 170 ARPU Prediction from ICRA

The latest tariff hikes will help the telcos in increasing ARPU levels. Further, the constant upgradation of 2G subscribers to 4G would add to the ARPU of the telecom operators in the coming years. The moratorium on statutory payments provided to the telecom operators would provide an annual breather of about Rs 40,000 crore to the industry till 2025.

Highlights

  • Bharti Airtel and Vodafone Idea have been very vocal about the need for the telecom industry ARPU figure to improve.
  • Telecom industry revenues are expected to grow by 10% to 20% in FY23 followed by a growth of 10% to 12% in FY24.
  • Telcos would also be looking to deleverage with all the relief they have on their sleeves for the next few years.

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Bharti Airtel and Vodafone Idea have been very vocal about the need for the telecom industry average revenue per user (ARPU) figure to improve. ICRA, an independent credit rating agency, has predicted that telecom sector ARPU will reach Rs 170 levels by the end of FY23. It will improve the overall profit generation for the telcos. This, coupled with the relief measures that the Government of India (GoI) has announced for the telecom sector, would create enough headroom for the industry to reduce debt as well as invest more freely in technology and equipment upgrades for 5G.

Telecom Industry Revenues Expected to Grow by 18% to 20% in FY23

Sabyasachi Majumdar, Senior Vice President and Group Head, Corporate Ratings, ICRA Limited, said the latest tariff hikes would help the telcos in increasing ARPU levels. Further, the constant upgradation of 2G subscribers to 4G would add to the ARPU of the telecom operators in the coming years, added Majumdar.

Majumdar also said that the telecom industry revenues are expected to grow by 10% to 20% in FY23, followed by a growth of 10% to 12% in FY24.

According to ICRA calculations, the moratorium on statutory payments provided to the telecom operators would provide an annual breather of about Rs 40,000 crore to the industry by 2025. On top of this, the bank guarantees (BGs) have been slashed significantly, and the Department of Telecommunications (DoT) even returned thousands of crores worth of BGs to the telcos recently.

But the government has still been able to earn its budgetary revenue from the telecom sector as both Jio, and Airtel pre-paid their spectrum-related dues amounting to the tune of Rs 26,300 crore. The GoI is expected to rake in about Rs 54,000 crore from the telecom sector in FY22, which is very close to its expected revenues from the sector this fiscal.

Telcos would also be looking to deleverage with all the relief they have on their sleeves for the next few years. ICRA expects the industry debt to remain at Rs 4.7 lakh crore levels before the end of March 31, 2022, dropping to Rs 4.5 lakh crore as on March 31, 2023.

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