India's telecom industry is soon going to undergo a major change once the 5G networks are commercially launched. According to a credit rating firm ICRA, the next phase of growth for the telecom industry will come from ‘non-telecom’ businesses.
The non-telecom businesses include internet of things (IoT) services, enterprise business, digital services, cloud services, fixed broadband services, and more. Companies such as Airtel and Vodafone Idea (Vi) have already started offering enterprise solutions to India's businesses. Simultaneously, Jio is also on the edge of announcing IoT services and more to serve enterprise needs in India.
Jio already offers business-specific connectivity plans that are much cheaper than what Airtel offers to its clients. In the medium-term, the telecom operators will battle over providing the best enterprise solutions as well. Thus, operators' focus will not only be on the subscriber market but also on the overall enterprise market. Bharat Sanchar Nigam Limited (BSNL) should take note of this and start expanding its domain of services as soon as possible.
APRU of Telecom Industry Will Grow in Medium Term
ICRA said that the average revenue per use (APRU) for the telecom industry would grow in the medium-term to Rs 220 and help the industry grow its revenues as well as margins. All of this will happen because of the upgradation of 2G users to 4G and also due to the rise in average mobile usage.
4G hasn’t penetrated the Indian market completely yet. There is still a large number of people who don’t have proper connectivity, let alone 4G networks in their areas. This is what the operators could leverage for growing their operations fast over the next few years.
The rural parts of India and better 4G connectivity across urban areas will help the industry add new 4G subscribers faster.
ICRA noted that the positive impact by growth in revenue over the next two years would be offset by the adjusted gross revenues (AGR) dues liability and the money spent on the recent spectrum auction.
Further, the industry's total debt is expected to remain elevated at Rs 5 lakh crores by the end of FY22.