The impact of the lockdown has been less on the telecom industry.
The increase in tariff and upgrading of subscribers (2G or 3G to 4G) in December 2019 last year has led to an increase in the revenue of telecom companies in FY 2021. Now telecom companies are once again thinking of increasing the tariff. According to the Information and Credit Rating Agency (ICRA) report, the tariff may increase in the current financial year. Recently, Vodafone Idea Limited had increased the rates of its postpaid plan. Which will increase their revenue growth in the next financial year 201-22. Apart from this, their profitability will also improve due to high operating leverage. Work from home culture and online classes have increased data consumption due to the Corona epidemic. This has increased the revenue per user of the companies.
11% revenue growth forecast in FY21
Due to strong competition, a big decline in the revenue and profitability of the telecom companies was seen, but the industry’s revenue will increase in the current financial year 2020-21. According to the ICRA report, telecom companies’ revenue will increase by 11 per cent due to increase in tariff and frequent upgrades. There will be about 13 percent revenue growth in the next financial year 2021-22.
Along with revenue, debt also increased
Apart from revenue growth, the ICRA report has also projected an increase in debt on telecom companies. According to estimates, there will be a debt of 4.9 lakh crores on the telecom industry in FY 2021 and it will decrease in the next year but very less. According to the report, in the next financial year 2022, the telecom industry will have a debt of 4.7 lakh crore. In FY 2020, a large number of telecom companies repaid debt through rights issue, QIP issue and additional sponsor fund infusion. Due to this, the debt of telecom companies decreased to 4.4 lakh crore as on 31 March 2020 while it was 5 lakh crore as on 31 March 2019.
AGR of telecom industry increases
According to TRAI, in the first half of the current financial year 2020-21, the telecom industry’s ARPU (average revenue per user) increased by more than Rs 90. Due to this, AGR (adjusted gross revenue) of telecom companies increased by 25 percent. However, talk about the government telecom companies, there was a decrease in their ARPU, while the ARPU of private companies increased.
Possibility of help from the government
The government has also come forward to help telecom companies. Last year in November 2019, it was proposed to provide financial assistance to companies on the postponement of spectrum auction installations in FY 2021 and FY 2022. Apart from this, the ICRA report has raised the possibility that telecom companies can get relief in spectrum payments and cuts in levies. Apart from this, the government can help them by bringing floor tariffs for data.
Lockdown had less impact telecom industry
Most of the industry was affected by the Corona epidemic but it did not have much impact on the telecom industry. The ARPU (users on average revenue) of telecom companies declined due to non-availability of physical recharge at the beginning of the lockdown (shops were closed during the lockdown) and increased incoming facilities. During the lockdown, the telecom companies did not stop the incoming call facility even after the validity was not recharged. However, after some time the situation improved due to an increase in usage and tariff. Data usage has increased due to work from home, online school, content watching aid.