Reliance Jio may continue to disrupt the market by offering cheaper tariffs: Fitch

Written By:

According to new report rating firm Fitch, Reliance Jio may continue to disrupt the market by offering cheaper tariffs than the incumbents to gain market share.

Reliance Jio may continue to disrupt the market

The report says that "ongoing industry consolidation, which will leave only five telcos in the market, will bring back pricing power to incumbents only after one to two years."

"However, in the medium term, Jio could raise tariffs to start generating the return on its massive investment of $27 billion-30 billion." the report said.

It added, that "we have a negative outlook on the Indian telco market as we expect the credit profiles of the top-four telcos to come under pressure from tougher competition and greater capex requirements."

Meanwhile, Fitch says that "Airtel has about 35 percent revenue market share, has diversified and integrated operations and owns a large share of Indian spectrum assets, which are also the most efficient assets. We believe that its established market position and diversified revenue base will help it withstand intense competition in the Indian mobile segment and it gained about 150bp of revenue market share in 2016 as smaller telcos exited due to fierce competition and another 200bp with the acquisition of Telenor India, which is subject to regulatory approvals.

SEE ALSO: BSNL upgrades Broadband speed to minimum 4 Mbps

"Bharti Airtel is committed to its investment-grade rating. We do not expect large debt-funded acquisitions during FY18-19 given management's strategy to reduce debt through the possible sale of a 10 percent stake in tower subsidiary," Fitch said.

The rating agency further added that Bharti Airtel has sufficient spectrum assets to expand its data services in the medium term and will not need to acquire more spectrum. It is unlikely to bid for 700MHz spectrum as the efficiency gains from the 700MHz spectrum do not currently justify the high reserve price set by the regulator.

However, competition is likely to remain intense.

Read More About reliance jio | airtel | news

Please Wait while comments are loading...
Recommended Stories
Opinion Poll

Stay updated with latest technology news & gadget reviews - Gizbot