The country’s top three private telecom operators will move to another round of tariff increases in the second half of today’s fiscal cycle and will close FY23 with 20-25 percent revenue growth, a report said on Tuesday.
A growth in average revenue per user is essential for the industry to invest in the network and spectrum, and if they do not, it could result in poor service delivery, the domestic wing of domestic rating agency Crisil said in a report.
After years of intense competition following the entry of the deep-pocketed Reliance Jio, the sector of December 2019 had started charging rates.
“… revenue from the top three players is expected to grow a robust 20-25 per cent this fiscal,” the note said, adding that the operating profit margin will expand by 1.80-2.20 per cent during the fiscal .
It said after a slow growth of 5 per cent in the ARPU (Average Revenue Per User) in FY22, the crucial number is set to grow by 15-20 per cent in FY23 as the full impact of the hikes performed in ‘ the previous fiscal plays out, as well as on the back of the newer hikes that are expected in the second half of the current fiscal.
Since players are expected to incrementally spend on network and regulatory capex in FY23, ARPU growth and tariff increases may reduce some pressure on their books, it said.
In the fiscal disappearance, there was a drop in the total number of subscribers as 3.70 crore inactive users were removed, the report said, adding that the active subscribers increased during the year.
The three top telcoes witnessed a 3 percent increase in the number of active users by adding 2.90 crore subscribers to the number, it said.
Reliance Jio saw its total subscriber base fall sharply between August 2021 and February 2022. However, the share of its active subscribers reached 94 percent in March 2022, compared to 78 percent in the first quarter of last fiscal year, it added, adding that Bharti Airtel added 1.10 crore active subscribers in fiscal year to increase their share of active users to 99 percent.
For Vodafone Idea, it was a “mixed bag” during FY23, as the company lost 3 crore of active subscribers due to low capability in 4G and “reduction of services”, the rating agency said.
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