According to a recent report by ICRA, steady recovery is expected in the telecom sector to sustain by way of average revenue per user (ARPU) expansion. This is likely to boost revenues and margins for the industry.

Further, the credit rating agency added that debt continues to remain the major impediment for the industry as industry added adjusted gross revenue (AGR) levies related debt and spectrum debt after recently-concluded auctions. To this end, ICRA expects total industry debt to remain elevated at Rs 5 trillion as on March 31, 2022.

As per ICRA, the next round of tariff hikes can provide a fillip to the ARPU. The expansion in profitability is expected to result in improvement in the debt coverage metrics of the industry, but it would continue to remain weak given the high debt levels. Further, it said that there has been an improvement in the operating metrics of the industry, the next phase of growth will be driven by the non-telco businesses, which include enterprise business, cloud services, digital services and fixed broadband services. The growth in these segments is expected to be strong, albeit at a lower base.