The telecommunications industry in India is expected to grow rapidly in fiscal year 2023. Revenue growth will be driven by rising tariffs as well as a significant increase in data consumption in the country. The sector has been significantly hit by debt following issues such as the judgment in the Adjusted Gross Revenue (AGR) case, which has triggered huge liabilities for telecom operators.
IANS reported that while the pandemic has had a negative impact on other industries, it has proven to be a boon for the telecom sector as businesses rely on telecom providers to keep their operations running smoothly, according to the Brickwork Ratings report. As a result, strong industry growth indicators such as average revenue per user (ARPU) and minutes of use (MOU) have increased. According to the report, price hikes and increased data consumption could further ease telecom industry concerns, as revenues have already grown by 6% to 8% in FY22.
Brickwork Ratings (BWR) said in a report, “While the pandemic had a bad influence on other sectors, surprisingly, it turned out to be a boon for the telecom sector as businesses depended on telecom operators for the smooth running of their operations.”
Additionally, as the world moves online for work and school, a greater transition of subscribers to the 4G network is on the horizon. This will perhaps further increase the revenue of the country’s telecom operators. It should be noted that average mobile data usage increased by 37% year-over-year in the second quarter of FY2022. Telecom operators recently announced rate increases ranging from 20% to 25%, which will further help the sector.
The report further suggests that price hikes are rare in India, which is dominated by three carriers and has a highly competitive environment. However, recent price increases will help telecoms improve their ARPU, easing their financial burdens and allowing them to better invest in the future 5G network. However, price increases may deter more users from switching from 2G to 4G network. Since more than 44% of subscribers in India reside in rural areas, price increases may be unattractive.
The Department of Telecommunications (DOT) recently issued bank guarantees of Rs 9,200 crore deposited earlier by telecom companies, increasing liquidity and reducing financial costs.
Another Credit Suisse report says the dramatic transition from the digital realm to the metaverse will increase demand for data globally 20-fold by 2032 and Bharti Airtel and Reliance Jio are two of the only telecom operators well positioned to take advantage part of the boom in India.