India Ratings and Research (Ind-Ra) has published the August 2020 edition of its credit news digest on India’s telecom sector. It highlights the trends in the telecom sector, with a focus on subscriber additions, subscriber market share, broadband subscribers, data usage, pricing and regulatory and industry updates.
The key highlights of the report are as under:
Industry-wide Subscriber Base Continued to Decline in May 2020: The industry-wide subscriber base continued to decline month-on-month in May 2020 for the third month in a row. Ind-Ra believes that the impact is due the outbreak of COVID-19, which has led to issues such as movement of migrant labourers to their home towns and SIM card consolidation. The industry-wide subscriber base declined by 5.6 million subscribers in May 2020, though at a moderate rate as compared to the decline of 8.2 million subscribers seen in April 2020. The agency believes that a further movement in the subscriber base needs to be monitored over the medium term, to identify whether the industry will see a recovery in subscriber base or this is a permanent impact.
Industry-wide Revenue (ex-BSNL) Almost Stable; Vodafone-Idea Continued to Lose Market Share: As per The Telecom Regulatory Authority of India data, the industry-wide revenue (excluding Bharat Sanchar Nigam Limited (BSNL)) remained almost stable in 1QFY21. While Reliance Jio Infocomm Limited (RJio; ‘IND AAA’/Stable) continues to be the largest player by revenue and subscriber market share and Bharti Airtel Limited (debt rated at ‘IND A1+’) has been able to largely maintain its market share, Vodafone Idea Limited (VIL) is constantly losing its market share for the past two years to these two telcos. In May 2020, VIL’s revenue market share slumped significantly in its two key circles Delhi and Mumbai, resulting in the telco losing around 600bp revenue market share (excluding BSNL) to Bharti Airtel and RJio. Ind-Ra believes that whether VIL continues to be a niche player or reverts to being a pan-India player remains to be seen over next nine to 12 months.
Supreme Court Allowed Staggered Payment of AGR Dues over 10 years: In the final hearing related to adjusted gross revenue (AGR) dues on 1 September 2020, the Supreme Court (SC) has provided certainty related to the amount of AGR dues payable and the timelines for such payment. While the SC has reinstated that the amount determined by the Department of Telecom will be final for payment by the telcos, the apex court has provided some relaxation for payment of the said dues. The AGR dues are required to be paid by telcos in a staggered manner over 10 years from 1 April 2021, while an upfront payment of 10% of the total dues is required by 31 March 2021. Ind-Ra believes that the relaxation in timelines will provide a liquidity cushion to Bharti Airtel and VIL. RJio has already paid the dues to the Department of Telecom.
Source: Telecom Regulatory Authority of India
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