The past year was an eventful one for the sector as it witnessed major 4G service roll-outs by operators and increased industry participation in ongoing government programmes such as Digital India and Make in India. The sector also saw the entry of Reliance Jio Infocomm Limited (RJIL) in September 2016. These developments had a mixed impact on the financial performance of telecom companies.
While companies such as Bharti Airtel, Sterlite Technologies and Finolex Cables registered an increase in profits in 2015-16 over the preceding year, Reliance Communications, Idea Cellular, Himachal Futuristic Communications Limited, Tata Communications, Aksh Optifibre and Birla Ericsson Optical reported a fall in net profits. Bharat Sanchar Nigam Limited, Tata Teleservices (Maharashtra) Limited, Mahanagar Telephone Nigam Limited, Sistema Shyam TeleServices Limited, and Aishwarya Technologies and Telecom registered a decline in losses, while GTL Limited and GTL Infrastructure reported higher losses. ITI Limited, which had posted a net loss in 2014-15, reported a profit in 2015-16.
On a quarterly basis, the performance of telecom operators during the quarter ended September 2016 was significantly impacted by RJIL’s service launch. The incumbents were compelled to slash tariffs, which resulted in lower realisations. Thus, several of them posted declining profits as compared to the corresponding quarter in 2015. However, as per industry estimates, the impact of tariff revisions was only partly reflected in the quarter ended September 2016 and the full picture will only emerge in successive quarters.
The following is a review of the financial performance of select telecom companies.