Telecom industry revenue rises in Q3, courtesy tariff hike: Report

NEW DELHI: Indian telecom industry's revenue increased by 9 per cent quarter-on-quarter in the third quarter of FY20 supported by tariff hikes, which has more than offset the decline in the subscriber base in the given quarter, India Ratings and Research (Ind-Ra) said in its latest report.

After almost two years, revenue grew across all the major telecom operators in the country. However, even after the tariff hikes, competitive pressure for telecom operators remains elevated.

The agency, however, said that the revenue related momentum needs to be monitored because it depends on subscriber base which declined in November and December 2019.

Despite the tariff hike, the competitive pressure for telcos remains elevated since Reliance Jio's data tariffs are still 25 per cent lower than those of Bharti Airtel and Vodafone Idea.

The recent tariff hikes resulted in an increase in average revenue per user (ARPU) of all three major telcos in the range of 2 to 7 per cent quarter-on-quarter, Ind-Ra said in a report.

The agency said that the share of broadband subscribers in the overall subscriber base is increasing continuously, which augurs well for revenue growth for Indian telcos.

The agency further added that the release of a consultation paper by Telecom Regulatory Authority of India to evaluate setting up floor prices for telecom tariffs and extension of the implementation of zero interconnect usage charge regime by a year are positive moves for the telecom industry.

It also noted that struggling telco Vodafone Idea does not have the ability to pay adjusted gross revenue (AGR) related dues due to lack of clarity on promoter equity infusion, severe erosion in refinancing flexibility and insufficient cash balance (Rs 12,500 crore as of December 2019).