Telecom Industry Revenue Will Grow by 40% in FY20-21: Analysts

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The telecom industry's revenues are expected to grow by 40% in the FY20-21 compared to the 25% growth in FY19-20. According to a rating agency Fitch, Reliance Jio and Bharti Airtel will keep growing at a steady rate in terms of market share in the near future. Both the telcos are expected to own 80% of the market share, eating up a major chunk of business from Vodafone Idea’s (Vi) portfolio. Further, the earnings before interest tax depreciation and amortisation (EBITDA) for both the telcos will soar higher backed by the tariff hikes, more consumers shifting to 4G devices and networks, and increased data usage per user — more details on the story ahead.

Jio and Airtel Likely to End Up With 80% Market Share

As per an ET Telecom report, Airtel and Jio had a combined market share of 75% during last December. It is likely to reach 80% in the next 12 months with Vodafone Idea estimated to lose around 50-70 million users.

The estimates are based on the third-quarter results announced by the telcos. Jio reported an increase in revenues and EBITDA by 33% and 50% in the nine months of FY20-21. On the other hand, Airtel reported growth in revenues and EBITDA by 26% and 48% respectively during the same period.

According to Nitin Soni, senior director Corporate, Fitch, the average revenue per user (ARPU) is expected to increase by 5% to 10% for the telecom industry in the next financial year. This will likely result from more and more 2G and 3G users shifting to 4G network and devices.

Further, Vi and Airtel are both expected to introduce tariff hikes. Vi has a very poor ARPU at the moment, and the tariff hike will be aimed to improve that while Airtel will look to enhance cash flow with increased tariffs.

Another factor we believe will be beneficial for the industry is if both Airtel and Jio can rapidly move with 5G, get approvals from the government, and provide next-generation connectivity services.

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