Reliance Jio, Airtel, And Vodafone-Idea Revenue From Wireless Services Might Fall In Q1 FY21

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Even though the Indian Government has listed telecom services under essential services, it is expected that its revenue will fall in Q1 FY-21, due to COVID-19 and the nationwide lockdown. The lockdown has delayed the recharges as retail shops were closed; there were no new subscriber's additions and no revenue from international roaming.

Telecom Revenues From Wireless Services Might Fall In Q1 FY21

 

"We expect ARPU to decline sequentially in Q1FY21 after healthy growth in Q4FY20. Bharti (Airtel) and VIL (Vodafone Idea) are likely to see 5 percent quarter-on-quarter (QoQ) fall in ARPU. Home broadband to see a healthy increase in new connections, boosted by the lockdown," said Emkay Global Financial Services report.

The report said that subscriber addition might decrease as smartphone sales have declined. In fact, smartphone sales are expected to decline further by eight to nine percent in Q2 and Q3 of this year. Furthermore, the firm also pointed out that the telecom operators are likely to save money on marketing and other administration work.

Reliance Jio, Airtel, Vodafone-Idea Should Launch New Strategies To Increase Average Revenue Per User

Meanwhile, research firm ICRA said that the operators need to increase their revenue by 13 to 30 percent if they want to pay or meet the AGR debt and spectrum instalments. The firm also highlighted that all operators have to increase their ARPU by Rs. 200 from the current Rs. 130 and Rs. 145.

"We expect that the increase in ARPUs required for various telcos to be in the range of 13-30 percent annually going forward to be able to meet the AGR related payouts (assuming a 20-year payment term) along with the existing debt repayments as well as the spectrum instalments which will start from FY2023," Anupama Arora, Vice President and Sector Head, Corporate Ratings, ICRA, said.

After looking at the situation, it can be said that telecom companies should encourage people to adopt new technologies, such as the 4G network as most of the people are still using 2G and 3G airwaves in the country. The 4G network will offer them better service, and this will increase their (people) data consumption. This will also help the operators to increase their revenue and ARPU in the future.

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