Reliance Jio could emerge as the largest telecom player, says India Ratings

According to a report by India Ratings, Mukesh Ambani owned Reliance Jio could emerge as the largest telecom player in the industry.

"RJio's dominance will increase as it would continue to seize market share in terms of both subscribers and revenue from Bharti Airtel and Vodafone-Idea and eventually emerge as the largest telecom player in the industry," the research agency has said in its release Thursday.

It said the focus of operators will eventually shift to average revenue per user (ARPU) from subscriber market share.

"The share of 4G subscribers, who offer higher ARPU, will be a critical profitability indicator and RMS will evolve accordingly. Revenue growth would be uneven across telcos and RJio is positioned to outperform peers with its superior offerings," report added.

The report further says overall subscriber growth will remain muted in FY20, or it could even witness a decline, as India is a dual-sim market, which could consolidate with ARPUs trudging upwards.

The ARPU is likely to improve over H2FY19-FY20 as the minimum recharge plans launched by Bharti and Voda-Idea will weed out low ARPU customers.

It said CapEx-to-revenue ratio for private sector telcos to remain at 25 percent-30 percent (estimated Rs. 700 billion) in FY20.

Telcos have continuously been investing in network augmentation, as evident from the surging order books and capacity expansion plans of optical fiber cable (OFC) players.

The telecom equipment industry is also witnessing strong growth because of rising data demand and the growing need for investments in technology.

In FY20, the industry may not witness active participation in 5G spectrum auctions because of several reasons such as companies having other capex priorities, the immature ecosystem for 5G, and already stretched leverage profiles. Therefore, any disruption from 5G is unlikely in the near term.