COAI Predicts Stability Return to Indian Telecom Market by Q4 FY20

Earlier this week, telecom operator Bharti Airtel reported a surprise 29% surge in March quarter net profit, aided by exceptional income gains

By May 8th, 2019 AT 6:18 PM
Highlights
  • After the entry of Reliance Jio, the sector became a debt-laden one
  • Operators are now focusing on other aspects like content

Stability and rationality may return to the telecom market by the fourth quarter of the current fiscal, as mobile operators move beyond hyper-competitive pricing into tapping new, value-added avenues of revenue to bolster topline and profit, according to industry body COAI. “We expect stability and rationality to return to the market. The market has been, in a sense, a bit irrational in terms of dynamics, in terms of pricing… the intensity of going after other people’s customers,” Cellular Operators Association of India (COAI) Director General Rajan S Mathews told PTI.

The telecom operators will look at getting more offerings like content, e-commerce and financial services aggregated onto their networks to enhance revenue streams and arrest declines in topline and bottom line, he said.

“I don’t personally expect to see revenue declining by the time we get to the fourth quarter of the current financial year. We have seen that for the last 5-6 quarters, we have seen a decline in topline and profitability.

“That will be arrested…I don’t see a great uptick in churn, and I don’t see hyper-competitive pricing going on…because of those factors, I would expect to see stability return to the market,” Mathews added.

Earlier this week, telecom operator Bharti Airtel reported a surprise 29% surge in March quarter net profit, aided by exceptional income gains.

The company, whose profitability has been battered by intense price competition posed by the richest Indian Mukesh Ambani’s Reliance Jio, earned a net profit of Rs 107.2 crore in January-March quarter as compared with Rs 82.9 crore in the same period of the previous fiscal, its first rise in profit after several quarters.

Its revenue soared 6.2% to Rs 20,602.2 crore for the three months ended March 31, 2019. Rival Reliance Jio had posted a 64.7% jump in net profit to Rs 840 crore in the March quarter of 2018-19. It had recorded a net profit of Rs 510 crore in the same quarter a year ago.

Reliance Jio’s operating revenue was up 55.8% to Rs 11,106 crore during the reported quarter as compared with Rs 7,128 crore in the year-ago period.

India’s largest telecom operator Vodafone Idea is slated to announce its result for the fiscal ended March 2019, on May 13. “From an industry perspective, we have probably seen the worst of churn, and worst of the intensity of cutting of tariffs, so we are seeing more rationality coming in because of the challenge of raising finances…The question of how bad is it going to be is past…We are looking at a more positive dimension,” Mathews said.

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