New Delhi, The latest telecom tariff hikes announced by telecom companies may generate additional operating profits of around Rs 20,000 crore for the industry once fully absorbed, ICRA said on Friday.
With improved financial metrics, the industry will have scope to undertake deleveraging as well as fund capital expenditure for technology upgradation and network expansion, said Ankit Jain, vice president and sector head, corporate ratings, ICRA.
The national rating agency's opinion comes after Reliance Jio and Bharti Airtel announced that they would implement tariff increases, in the range of 10 to 27 per cent, marking the first major increase in telecom tariffs in the industry in a period of two and a half years. half-year.
"The latest round of tariff hikes in which telcos increased prepaid tariffs by around 15-20 percent will provide traction on ARPU (average revenue per user) levels and may generate additional operating profits of around 20,000 crores to the industry once these increases are fully absorbed,” ICRA said.
Industry revenue is expected to grow 12-14 percent in fiscal 2025, which, given operating leverage, is likely to translate into a healthy 14-16 percent expansion in operating profits. .
"This, in turn, is likely to result in an improvement in the industry's return on capital employed (ROCE) to over 10 per cent by fiscal 2025," an ICRA statement said.
It expects the industry to report revenue of Rs 3.2-3.3 lakh crore with operating profits of Rs 1.6-1.7 lakh crore in FY2025.
Industry debt levels are expected to "moderate" and subsequently continue on an improving path, given rising operating profits coupled with muted action in the latest spectrum auctions and expected moderation in spending intensity of capital.
"...debt levels are expected to moderate to around Rs 6.2-6.3 lakh crore as on March 31, 2025, with the expectation of further decline in the future," Jain said.
This is likely to result in continued improvement in debt metrics, with industry debt/OPBDITA at 3.7-3.9 times and interest cover at 3.1-3.3 times for the year fiscal 2025.
On Friday, Bharti Airtel announced a 10-21 per cent hike in prepaid and postpaid mobile tariffs, coming on the heels of rival Reliance Jio's tariff hike.
The rate increases will take effect starting July 3.
For Airtel, while the daily data add-on tariff (1 GB) will see an increase of Rs 3 from Rs 19 to Rs 22, in case of 365 days validity plan that offers 2 GB/day, the increase is of 600 rupees. -- from Rs 2,999 to Rs 3,599.
In the unlimited voice plan category, the tariff has been increased from Rs 179 to Rs 199, which is an increase of Rs 20 on the 28-day validity plan that offers 2GB data to users, Airtel said.
"We have ensured that there is a very modest price hike (less than 70 paise per day) on basic plans, to remove any burden on budget-conscious consumers," Airtel said while announcing the revision of its mobile tariffs on Friday. .
India's largest telecom operator Reliance Jio on Thursday announced a 12 to 27 percent hike in mobile tariffs.
With improved financial metrics, the industry will have scope to undertake deleveraging as well as fund capital expenditure for technology upgradation and network expansion, said Ankit Jain, vice president and sector head, corporate ratings, ICRA.
The national rating agency's opinion comes after Reliance Jio and Bharti Airtel announced that they would implement tariff increases, in the range of 10 to 27 per cent, marking the first major increase in telecom tariffs in the industry in a period of two and a half years. half-year.
"The latest round of tariff hikes in which telcos increased prepaid tariffs by around 15-20 percent will provide traction on ARPU (average revenue per user) levels and may generate additional operating profits of around 20,000 crores to the industry once these increases are fully absorbed,” ICRA said.
Industry revenue is expected to grow 12-14 percent in fiscal 2025, which, given operating leverage, is likely to translate into a healthy 14-16 percent expansion in operating profits. .
"This, in turn, is likely to result in an improvement in the industry's return on capital employed (ROCE) to over 10 per cent by fiscal 2025," an ICRA statement said.
It expects the industry to report revenue of Rs 3.2-3.3 lakh crore with operating profits of Rs 1.6-1.7 lakh crore in FY2025.
Industry debt levels are expected to "moderate" and subsequently continue on an improving path, given rising operating profits coupled with muted action in the latest spectrum auctions and expected moderation in spending intensity of capital.
"...debt levels are expected to moderate to around Rs 6.2-6.3 lakh crore as on March 31, 2025, with the expectation of further decline in the future," Jain said.
This is likely to result in continued improvement in debt metrics, with industry debt/OPBDITA at 3.7-3.9 times and interest cover at 3.1-3.3 times for the year fiscal 2025.
On Friday, Bharti Airtel announced a 10-21 per cent hike in prepaid and postpaid mobile tariffs, coming on the heels of rival Reliance Jio's tariff hike.
The rate increases will take effect starting July 3.
For Airtel, while the daily data add-on tariff (1 GB) will see an increase of Rs 3 from Rs 19 to Rs 22, in case of 365 days validity plan that offers 2 GB/day, the increase is of 600 rupees. -- from Rs 2,999 to Rs 3,599.
In the unlimited voice plan category, the tariff has been increased from Rs 179 to Rs 199, which is an increase of Rs 20 on the 28-day validity plan that offers 2GB data to users, Airtel said.
"We have ensured that there is a very modest price hike (less than 70 paise per day) on basic plans, to remove any burden on budget-conscious consumers," Airtel said while announcing the revision of its mobile tariffs on Friday. .
India's largest telecom operator Reliance Jio on Thursday announced a 12 to 27 percent hike in mobile tariffs.
