The announced tariff hikes by the telcos could boost their operating profits by at least 40 percent and coupled with the moratorium on government dues, will help them invest more aggressively into 5G technology, says a report. Tariff hikes to lift the EBITDA, or earnings before interest, taxes, depreciation, and amortisation, of telcos by 40 percent and along with the moratorium on government dues, this will support 5G investments and credit profiles, Crisil said in a note on Tuesday.
Airtel and Vodafone Idea have announced up to 25 percent hike in their prepaid plans tariffs to improve financials, while Reliance Jio has announced up to 21 percent hike in mobile services tariffs from December 1. The agency sees an estimated 20 percent improvement in the Average Revenue Per Unit (ARPU) of the telcos, driven by the twin tailwinds of recent tariff hikes and ongoing customer upgrades, and expects this to lift their operating profit to Rs 1 lakh crore in fiscal 2023.
Improving bottom-line along with the moratorium on government dues will provide telecom companies room to invest an estimated Rs 1.5-1.8 lakh crore for 5G services over the current and next fiscal years, apart from improving their return on capital employed, it said. Moreover, the tariff hikes will also support their credit profile notwithstanding higher investments, it added. The tariff hikes and ongoing customer upgrades can push the sectoral ARPU by 20 per cent to Rs 160-165 next fiscal from Rs 135 last fiscal.
ARPU growth will lead to non-linear growth in profitability due to the high operating leverage. The tariff hike will lift the sector's operating by 40 percent to Rs 1 lakh crore next fiscal from Rs 72,000 crore in fiscal 2021, the agency said. Yet, the return on capital employed will be moderate at 7-8 per cent because of high capital intensity and adjusted gross revenue dues, it added.
Airtel and Vodafone Idea have announced up to 25 percent hike in their prepaid plans tariffs to improve financials, while Reliance Jio has announced up to 21 percent hike in mobile services tariffs from December 1.
- Huawei ban: Full timeline as company reports shipping 185M phones despite US ban
- Report: Foxconn's Brazilian iPad Plans in Jeopardy
- Top Current Affairs & GK for August 2019: Here's the round-up
- Gold Prices Jump By 377 Rupees On Strong Demand: 5 Things To Know
- Edited Transcript of BN4.SI earnings conference call or presentation 17-Oct-19 9:30am GMT
- Edited Transcript of MKSI earnings conference call or presentation 24-Oct-19 12:30pm GMT
- Edited Transcript of FTV earnings conference call or presentation 24-Oct-19 9:30pm GMT
- Huawei ban: Full timeline as exec admits it's having tough time without Google's support
- Huawei ban: Full timeline as Mate X foldable phone launches in China
- VIETNAM BUSINESS NEWS OCTOBER 18
- Edited Transcript of UMPQ earnings conference call or presentation 17-Oct-19 5:00pm GMT
Prepaid Tariff Hikes, Moratorium on Govt Dues May Boost 5G Adoption in India: Report have 462 words, post on www.news18.com at November 30, 2021. This is cached page on Law Breaking News. If you want remove this page, please contact us.