The revenue of telecom industry could face a downfall upto 6-8 per cent because of the price war between Reliance Jio Infocomm and Bharti Airtel, Vodafone and Idea cellular.
Due to the ongoing price war between Reliance Jio and older telecom companies like Vodafone, Airtel and Idea Cellular, the revenue of telecom industry could fall down to 6-8 per cent, reported ET.
Hetal Gandhi, director(research) at Crisil Ltd, said that the intense price war is not going to end soon and it has become more brutal now, which is why the pain is likely to continue in FY19, resulting in an adjusted gross revenue (AGR) skid.
As per Crisil director, the average realisation per MB has decreased from 23 paise in FY16 to just 1.6 paise in FY18 and it is expected to go down further by the end of FY19.
Naveen Kulkarni, an analyst at PhilipCapital said that industry’s revenue is likely to get dragged down further this fiscal amid massive SIM consolidation and falling ARPUs visible in a rapidly consolidating sector. He expects SIM card consolidation to get further accentuated with the Vodafone India-Idea Cellular merger, which could badly affect the AGR in the coming quarters.
“The industry’s Ebitda margin is expected to contract a further 150-200 basis points (bps) owing to the full year impact of the cut in interconnect charges and Bharti Airtel, Vodafone India and Idea Cellular will see a sharper deterioration,” said Gandhi to ET.
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