• The Indian telecom industry is expected to see a decline in revenue for the third straight year in 2018-19 amid intense competition, while “minor improvements” are expected in the next fiscal with a “modest increase” in pricing, according to ratings agency ICRA.
  • The launch of services by RJio [Reliance Jio] marked the beginning of intense price-based competition, which has largely continued.
  • The pricing pressure exerted on the industry manifested in severe deterioration in the financial performance, marked by decline in revenue, lower profitability [even losses for some telcos] and low cash generation.
  • However, it pointed out that the trends of last few months have indicated some recovery with ARPUs (average revenue per user) showing signs of stabilisation.
  • Industry revenue, which fell by 11% in FY2018 to ₹2.1 lakh crore, is estimated to decline further by 7% in FY2019.
  • The industry earnings before interest, tax, depreciation and amortisation [EBITDA] is estimated to reduce by 18% in FY2019, following a 21% erosion in FY2018 (₹49,000 crore).
  • FY20 can witness the benefits of higher data usage, and a relatively more consolidated and stable industry structure resulting in some pricing discipline.
  • The agency noted that the stress on the industry had impacted the government’s non-tax revenue from the sector with lower licence license fee (LF) and spectrum usage charges (SUC).
  • These two combined declined by 24% in FY18 and are expected to decline further in FY19.