According to Brickwork Ratings (BWR), Indian telecom industry is expected to witness healthy revenue growth in FY’2022-23.
The Indian tele-density has grown at a brisk pace in the past couple of years, making India the world’s second largest telecom network. Since the last couple of quarters, the average revenue per user (ARPU) has also grown at a steady rate, led by tariff hikes by all the three major telecom operators, as witnessed in November 2021. While the ARPU and minutes of usage (MOU) have grown at a steady rate, Brickwork Ratings (BWR) expects that it would further increase by 28-29 per cent and 16-18 per cent respectively in FY’2022-23.
As per BWR, the increase in the ARPU and MOU will improve the viability of the industry and help telcos better manage their debt repayments. In addition, the increase in online activities due to the work-from-home scenario has encouraged individuals to choose 4G networks over 2G and 3G.
The report further notes that as the revenue and the ARPU increasing due to an increase in data usage and tariff hikes and the recent reliefs announced, telecom operators are now more likely to participate in the auction for 5G wireless spectrums expected towards end- first half of calendar year 2022 (H1CY22).
The telecom players are waiting for the Telecom Regulatory Authority of India (TRAI) to submit its recommendations on the rules and regulations (expected in a couple of months) before the bidding launch. The launch of 5G would not only be good for this industry, but also help other industries such as manufacturing and construction in bringing in more automation in their processes. The relief package for the telecom sector by the government has allowed telecom operators to bring in fresh capital and help in managing debt obligations in their books. Although with the introduction of 5G, the debt amount in companies’ balance sheets would increase, revenues are also expected to increase proportionately, basis which BWR expects the earning before interest, taxes, depreciation and amortization (EBITDA) to show positive growth in FY’22 and FY’23.
