Slow Conversion From 2G To 4G Might Affect Revenue In FY21: Report

Telecom operators have become very active, ever since the lockdown was announced. Operators have introduced several benefits to help their consumers. However, a new report suggested that there the conversion from 2G to 4G is not going to happen at a large scale due to the nationwide lockdown.

It's believed that the overall revenue of the private telecom operators might fall this financial year, even though people are using more data these days."A sharp fall in 2G to 4G smartphone conversions" as availability of 4G smartphones would be disrupted if the lockdown is prolonged," Rajiv Sharma, research head at SBICap Securities was quoted by Economic Times.

"These conversions may have added 15 percent on-year growth in overall data consumption, and consequently, telco data ARPUs (average revenue per user) in FY21...this won't happen...," Sharma said.

Similarly, an analyst from Fitch ratings believes that the lockdown will affect the performance of all three telcos i.e Reliance Jio, Airtel, and Vodafone-Idea. He said that there are chances that data demand will decline as companies are not selling new phones.

"In such a situation, data demand could decline, overall, as subscribers won't be able to buy smartphones and migration from voice-only customers to 4G would slow down," Nitin Soni, director (corporates) at Fitch said. The firm also believes that smartphone sales are likely to be decreased by 30 percent between April to June.

Furthermore, all three operators had added 45 million users in December last year due to high smartphone sales. However, the situation has been changed now and no one is buying is smartphones. In fact, some sources close to the development said that smartphone companies are planning to reduce their workforces at their retail stores. It is worth mentioning here that handset makers are likely to face another issue with the workers, once the lockdown ends.