According to CRISIL, ARPU for Indian carriers would climb 8-10% to Rs 190 this year

According to CRISIL, these firms’ operational earnings might increase by 15 to 17 percent this year to Rs 1.2 trillion, up from Rs 1.04 trillion in 2021-22.

According to CRISIL Ratings, the average revenue per user (ARPU) of Indian telecom companies is expected to rise by 8 to 10% to Rs 190 this fiscal year. According to the statement, operational earnings for these companies might rise by 15 to 17 percent this year, hitting Rs 1.2 trillion, up from Rs 1.04 trillion in FY22.

This anticipated growth is linked to increased demand for larger data packs, which is being driven by an increase in data usage.

“Growth is expected to be fueled by an increase in data usage to 23-25 GB per subscriber per month this year, up from 20 GB last year, as well as a rebalancing of tariff plans, resulting in increased operating profitability.” “Despite limited revenue from 5G services, operating profit is expected to rise by 15-17 percent to Rs 1.2 trillion at the sector level,” said Manish Gupta, senior director and deputy chief rating officer at CRISIL Ratings.

The industry benefits from substantial operating leverage since around three-quarters of the overall cost structure is fixed, which means that every increase in ARPU automatically enhances operating profit, according to the agency.

Operating profit nearly quadrupled between FY20 and FY23, while ARPU climbed by a factor of 1.4.

CRISIL further stated that the roll-out of 5G services is projected to be slow, owing to the evolution of use cases and the current low rate of 5G smartphone penetration in India.

“As a result, 4G technology is expected to maintain its dominance for some time,” according to the agency.

According to CRISIL, telecom providers would likely invest approximately Rs 90,000 crore this year to improve network infrastructure. This is an increase over the previous year’s expenditure of Rs 80,000 crore, driven by increased data demand and the need to improve service quality and customer experience.

According to the agency, all major private telecom companies are well-positioned, having bought spectrum worth Rs 1.5 trillion in the previous auction. As a result, the agency expects to spend less money on spectrum acquisitions in the upcoming auction.

“Significant spectrum investments last year led to telecom debt (including lease liabilities) rising to Rs 6.3 trillion as of March 31, 2023, from Rs 4.6 trillion as of March 31, 2022,” said Naveen Vaidyanathan, director at CRISIL Ratings. Investments in 5G might increase this figure to Rs 6.5 trillion by the end of the fiscal year. The debt-to-Ebitda ratio is forecast to be three times this fiscal year, up from 3.3 times the prior year.”