The telecom industry woes according to ICRA is expected to persist amid intense competition and pricing pressures. A recovery, backed by restoration of pricing power with the telcos, is still not in sight.
The recovery, which was anticipated on the back of a consolidated industry structure and data usage with greater price-inelasticity, has been prolonged. To add to these, the recent rupee depreciation and increase in diesel prices would hurt the industry further.
The sector has been going through a phase of turbulence during the last few years, with intense competition and pricing pressures leading to a decline in revenues and profitability.
Consistent downward revision in prices has resulted in one of the steepest falls in the industry average revenue per user (ARPU) levels with the estimated blended ARPU falling from Rs 169 in Q1 FY2017 to Rs 116 in Q1 FY2019 – with the industry adjusted gross revenue (AGR) falling from Rs 44,570 crore to Rs 25,580 crore in the same period.