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Not shutting down operations in 14 circles, says Aircel
Aircel has delayed in repayment of interest on its debt obligations on account of its weak liquidity position as a result of its continuing weak operational performance in the hyper-competitive
Telecom service provider Aircel said that it is not shutting down operations in 14 circles.
"Media reports about Aircel as regard insolvency or shutting down operations in 14 circles is completely speculative & misleading," Aircel said in a statement.
Earlier this month, research firm Care Rating said Aircel has delayed in repayment of interest on its debt obligations on account of its weak liquidity position as a
result of its continuing weak operational performance in the hyper-competitive telecom sector.
The firm said that Indian telecom sector is witnessing intense competition with the launch of services by Jio.
The competitive pressure has led to stress on the cash flows and profitability of the incumbents. Gross revenue of the telecom sector for the quarter ended on March 31, 2017, was moderated by around 7 percent on the y-o-y basis. Although Aircel has reported a 6 percent growth on the y-o-y basis in the number of subscribers, Average Revenue per User(ARPUs) and PBILDT margin have consistently shown a downward trend leading to deterioration in its financial risk profile.
PBILDT for CY16 moderated to Rs.598 crore as against Rs.1429 crore in CY15. The loss for CY16 doubled to Rs.4319 as against a loss of Rs.2215 crore in CY15. The ability of Aircel to improve its operational performance in the current industry scenario will be critical and will continue to be a key rating monitor.
"The Indian telecom sector is witnessing a lot of volatility for the past few quarters with the launch of commercial services by Jio. The sector has seen continuing and intensifying competition which has resulted in consolidation among the players, with a few of the minor players exiting the telecom business while some others merging their businesses with larger players. The data services bundled with free voice services offered by the newest entrant have cannibalized both voice and data revenue stream of telecom service operators."
With the ongoing tariff war among telecom service operators, ARPUs are showing a consistent downward trend. Revenue growth, as a result, is also expected to be moderated, as telecom operators are offering very competitive service plans. This will also impact the government's share of revenue from the telecom sector as the government earns license fees based on the revenue of the telecom companies and taxes and levies, Aircel report added.