While there has been an improvement in the operating metrics of the industry, the next phase of growth will be driven by the non-telco businesses, which include – enterprise business, cloud services, digital services, and fixed broadband services, Sabyasachi Majumdar, senior vice president (Corporate Ratings) at ICRA, said in a release.
“We expect the industry revenues to grow by 11-13% per annum over the next two years, which given the high operating leverage, is likely to result in expansion in operating margins,” Majumdar said.
The addition of adjusted gross revenue (AGR) liabilities to the debt and the participation in the latest spectrum auction could dampen the positive impact of improvement in cash flow generation.
In the recently concluded spectrum auction, Reliance Jio emerged as the most aggressive bidder and bought spectrum worth Rs. 57,123 crore, followed by Bharti Airtel at Rs. 18,699 crore and Vodafone Idea (Vi) at around Rs. 1,993 crore.
Recently RJIL entered into a spectrum trading arrangement with Airtel to acquire more spectrum in the 800 MHz band, for around Rs1500 crore.
ICRA expects total industry debt to remain elevated at Rs.5 lakh crore as of March 31, 2022.
“While some improvement is expected in the debt coverage indicators following the improvement in operating metrics, they continue to remain weak with industry debt/OPBDITA of more than 5x for FY2022,” Majumdar added.
