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ICRA Maintains Negative Outlook for Indian Telecom Industry

Financial results News - Published on Fri, 13 Dec 2019

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Ratings agency ICRA has maintained a negative outlook for the Indian telecom industry, where major companies will have to repay massive dues to the department of telecommunications after an unfavourable Supreme Court verdict in the adjusted gross revenue case. The ratings agency has given its outlook until the end of this financial year ending March 2020. ICRA said “Consistent downward revision in prices resulted in one of the steepest falls in the industry average revenue per user levels, with the estimated blended ARPU falling from INR 169 in Q1 FY2017 to INR 124 in Q1 FY2020. Further, the industry is saddled with elevated debt levels and consistently high capex requirements. The debt has consistently remained high owing to reduction in organic cash flow generation and consistently high capex requirements.”

As per ICRA estimates, the telecom sector’s debt as on 31 March 2019 stood at INR 5 lakh crore, which may be reduced to around INR 4.4 lakh crore by 31 March 2020, on account of measures including rights issue and monetization of assets.

The negative outlook for the sector comes in the backdrop of SC’s 24 October order in the 14-year-long dispute over the definition of AGR between the DoT and telecom companies. The SC had asked the firms to pay the dues within three months. The telecom industry’s three main players Bharti Airtel Ltd, Vodafone Idea Ltd and Reliance Communication, which are already grappling with mounting debt and shrinking revenues, are required to pay around INR 92,000 crore to the government in form of retrospective AGR dues.

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Posted By : TelecomGuru on Fri, 13 Dec 2019
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