According to Fitch Ratings, the Indian telecom operators are planning to invest a ?significantly lower proportion? of their revenues over the next two years as compared to operators in countries like China, Indonesia and Philippines. This is primarily due to weaker balance sheet of the Indian telecom operators.
As per the global rating agency, the Indian telecom operators? combined 2013 capex guidance ($5-6 billion) represents just 17-19 per cent of the industry revenue as compared to 30 per cent in China ($55-60 billion), Indonesia ($4-5 billion) and 20-21 per cent for the Philippines ($1-1.5 billion).
Fitch Ratings underlines that the Indian operators? balance sheets have stretched due to intense competition and the large spectrum fees paid by the operators during 2010-2012. The average funds flow from operations-adjusted net leverage for large Indian operators is about 3.0x-5.0x versus 1.5x and 1.0x-2.0x against operators in China, Philippine and Indoneasia.
The Indian, Chinese, Philippines and Indonesian markets are at similar stages of data penetration. However, the performance of Indian operators is indicative of lower capex, whereas the other three countries are expected to make huge investments in data services and are expanding their 3G and 4G networks. For example, Chinese service providers have raised their 2013 capex forecasts by 12-15 per cent.
Currently each Indian operator has 10-15 million subscribers per MHz of spectrum as compared to 5-6 million subscribers for Chinese, Philippine and Indonesian operators. And thus, the Indian operators are required to invest more to decongest their networks. Also, the capex per subscriber for Indian operators at $6 per subscriber is lower than in China (over $50 per subscriber), Indonesia and the Philippines ($16 per subscriber).
