Telecom companies may ring in stable 2018

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The Indian telecom industry, having weathered one of its most turbulent years, is looking at a more stable twelve month where tariff wars will ease out, revenues from customers will increase, companies will assemble their merged entities and go slow on its shopping spree. The sector, with its three big players, will instead focus on data, innovative services and other forms of business within the industry keeping the customer in mind. 

Telecom, telecom companies, India
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“Fitch’s ratings for the Indian telecom sector has been revised to stable in 2018 from a negative in 2017,” said Nitin Soni, director at Fitch Ratings to ET. Soni expects the average revenue per user (ARPU) — a key industry parameter — to increase by 5-10% in the coming year.

“Telcos will stop promotions and discounts and focus on return on investments,” said Soni. ARPU in the September quarter had plummeted by 40%, compared on a year-to-year basis because of the severe tariff wars that erupted after Reliance Jio Infocomm’s (Jio) entry in 2016.

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The ratings firm said the industry, which has become a three-player market, will garner 90% of revenue market share, against today’s 85% after smaller players exit, leaving the larger ones with more control.

“2018 will be an important year for telcos and tower companies alike, as the national telecom policy (NTP 2018) will be unveiled, paving the way forward for a conducive ecosystem,” said Rajan S Mathews, director general of Cellular Operators Association of India (COAI). He said that consolidation in the sector will take firm shape and eventually result in improved margins for the telcos.

“Telcos may also look to sell their tower assets to fund capex, which along with consolidation among different infra providers would lead to the emergence of 3-4 independent infrastructure service providers,” said Mathews.

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