The telecom industry in India is expected to witness strong revenue growth in the financial year 2023. The industry will witness revenue growth on the back of increased tariff charges as well as a sturdy rise in data usage in the country. The sector has been quite adversely affected by the debt due to factors such as the Adjusted Gross Revenue (AGR) case verdict which created massive liabilities for the telcos.
Growth of Telecom Sector
According to a report from IANS, a Brickwork Ratings report states that while the pandemic had a bad influence on the other sectors, surprisingly, it turned out to be a boon for the telecom sector as corporates were dependent on telecom operators for the smooth running of their operations. This resulted in an increase in the sector’s key growth factors such as ARPU and MOU. The report further states that the tariff hikes and increased data usage may further ease the difficulties in front of the telecom industry as it has already increased the revenues from 6% to 8% in FY22.
In addition to this, a larger subscriber shift towards the 4G network is impending as the world has turned online for work as well as learning. This will further increase the revenues for the telcos in the country. It is to be noted that there was a 37% increase YoY in average wireless data usage in the second quarter of the financial year 2022. Telcos also imposed tariff hikes recently of about 20% to 25% which is further going to aid the industry.
The report suggests that price hikes are quite uncommon in India as it is mainly dominated by three telcos and has a highly competitive scenario. However, the recent tariff hikes will help in improving the ARPU for the telcos helping them with their financial troubles and allowing them to invest better in the upcoming 5G network. Although, price hikes may prevent more subscribers from moving to 4G from 2G. Around 44% of the subscribers in India belong to rural areas and hence, the price hikes may not be that encouraging.