Fitch Ratings published a report that indicates that Reliance Jio and Bharti Airtel will continue to gain subscribers from smaller telecom operators due to their fifth-generation (5G) services. Both telcos are expected to cumulatively garner 80-85 per cent of the revenue of private telcos in 2024. Jio and Airtel launched their 5G networks in October 2023 and have cumulatively expanded the coverage of their 5G mobile networks to over 10,000 cities and towns, claiming to have achieved a milestone of 50 million 5G customers. However, Vodafone Idea Limited (Vi) has yet to launch its 5G network. The two telcos are increasing their revenue market share at the expense of their loss-making rivals.

Additionally, the Fitch report noted that Airtel’s credit rating was recently revised upwards from ‘bb’ to ‘bbb’, reflecting the company’s transition towards a more transparent regime. However, the Indian government has since taken steps to alleviate the financial burden of the telecommunications industry, such as deferring spectrum liability payments, reducing the base price of lower bandwidth spectrums and spectrum usage charge (a form of tax that will now decline to 0.5 per cent of revenue from about 3-3.5 per cent), allowing adjusted gross revenue penalties to be paid in annual instalments, and providing a moratorium on these payments for a few years. The government also converted its deferred spectrum liabilities to equity of 33 per cent for Vi, to provide the company with a cash cushion in an attempt to promote greater competition in the sector.

Meanwhile, the report added that telecommunications companies in India and Indonesia are likely to accelerate 5G investments over the next two to three years in order to mitigate cash burn while 4G networks remain the dominant technology in these markets.