According to ICRA, there is considerable uncertainty in the sector following the Department of Telecommunications (DoT) plea related to elongation of payment period to 20 years still pending in the Supreme Court (SC).
The credit rating agency said that there is uncertainty in the industry on the timelines and funding of payments on account of statutory adjusted gross revenue (AGR) related dues that are required to be paid as per the SC order.
However, ICRA said that the telecom industry had witnessed greenshoots of recovery in financial year (FY) 2020. This growth, as per the agency, is attributed to steady average revenue per user (ARPU) improvements, deleveraging initiatives and moderation in capex intensity.
ICRA also said that it does not expect any major impact of the ongoing nationwide lockdown due to COVID-19 on telecom services, and believes that pressure on revenues on account of limited customer addition, along with lack of physical recharges is moderated by the increased mobile usage on account of work from the home regime as well as content usage.
In October 2019, the SC while settling the long-standing dispute between telecom carriers and the department, upheld the DoT’s demand that operators include non-telecom service revenues in their AGR.
In March 2020, the DoT had sought intervention from the top court to allow a 20-year term for embattled telcos. However, the matter is yet to be taken up by the court and has been delayed following the Coronavirus outbreak.