India’s biggest incumbent carriers – Bharti Airtel, Vodafone India and Idea Cellular will continue to engage in a fierce price war with Reliance Jio Infocomm even at the risk of severely dented bottom-lines in FY18 simply to hold on to their market leadership, analysts at Crisil Research said.
Ajay Srinivasan, Crisil Research director tracking the telecom sector said that at least, two out of the top three telcos will bleed in FY18, but competition will only heat up further as market leadership is always worth bleeding for.
Srinivisan expects the price war in India’s Rs 1.5 lakh crore wireless telecom market to continue this fiscal (FY18), leaving bruised bottom lines in its wake.
According to Crisil, while the overall data traffic has grown five times in the past one year, a 60 percent fall in 4G data prices since Jio’s launch last September resulted in muted 2 per cent growth in adjusted gross revenue (AGR) for the telecom industry in FY17.
Going forward, the rating agency expects top incumbents to report AGR growth “varying between 0-5 percent in the current fiscal, given the aggression being shown by them to protect their subscribers”.
According to Crisil Research, returns of Indian telcos also indicate a similar trend. For instance, “the profitability of Bharti’s India operations is better than its peers, and its average returns is closer to 10 percent compared with 6-to-8 percent for the next two players,” said Srinivasan.
By Baishakhi Dutta
