Telecom Industry Woes To Continue Due To AGR Issue: ICRA


The Indian telecom industry is on a roller coaster ride. All private telecom operators have increased tariff prices to raise their ARPU. But now, a new report by the research firm ICRA has intimated that the ongoing woes will continue in the industry. The firm has highlighted that the telecom operators have to pay AGR dues at the time when it was on a recovery track. According to the Supreme Court order, Airtel and Vodafone have to pay dues in three months.

Telecom Industry Woes To Continue Due To AGR Issue: ICRA


"The sector has passed through a phase of turbulence during the last few years, with intense competition and pricing pressures leading to a decline in revenues and profitability," ICRA said in a statement.

The firm pointed out that the ARPU has fallen to Rs. 124 in Q1FY 20 from Rs. 169 Q1FY 18. The industry is facing a huge financial crisis due to debts. Notably, the firm also mentions that the debt as of March 31, 2019, is stood at Rs. 5.0 lakh crore.

For the unaware, both incumbents Airtel and Vodafone-Idea posted a loss of Rs. 74,000 crore in Q2 of this financial year. "The telecom operators announced a steep tariff hike, first of its kind in a long time, to the tune of 35-40 percent, which will manifest into improvement in ARPU levels and a healthy improvement in organic cash flow generation," the firm said.

The research firm has also identified some measures which will help telecom operators. It includes pricing improvement and implementing new use cases for telecom services. It added that the latter can be useful in the longer-term and for that telecom operators have to make more investments in the country.

Lastly, the research firm believes that the widespread penetration of broadband and DTH services will help operators. Apart from that, the firm noted that companies should focus on retaining customers.

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