See Telecom Industry Earnings Under Pressure For Another Four Quarters: COAI
COAI expects earnings of mobile operators to remain “depressed” for another 3-4 quarters.
Industry body COAI expects earnings of mobile operators to remain “depressed” for another 3-4 quarters, hurt by the sheer intensity of competition in the telecom market.
Major operators are slated to announce their January-March quarter results in the coming weeks, in a market defined by cut-throat competition and falling tariffs that benefit consumers but erode telcos’ profitability.
A recent report by the Telecom Regulatory Authority of India has noted that the gross revenue of telecom services providers fell 8.1 percent while the licence fee collected by the government dropped by 16 percent year-on-year in the quarter ended Dec. 31, 2017.
The adjusted gross revenue earned by companies from sale of telecom services declined by 16.05 percent to Rs 38,536 crore in the said quarter on year-on-year basis, reveals TRAI’s quarterly performance indicator report.
Cellular Operators’ Association of India Director-General Rajan Mathews sees no let up in pressure in coming months.
The intensity of competition will ensure that earnings will be depressed for 3-4 quarters. This is something that is going to be the new normal and I don’t see how it will materially change.Rajan Mathews, Director, Cellular Operators’ Association of India
Players in the industry are facing two types of challenges -- difficulty in raising prices after offering large discounts and increased commoditisation of various services, Mathews told wire agency PTI.
“So, we have to look for augmented revenue streams and we are hoping that the operators will be rational enough not to commoditise the new opportunities coming through like Internet of Things, 5G etc,” he said.
In a recent earnings preview for the sector, Kotak estimated that Jio's aggressive pricing moves in January, combined with the impact of international termination rate cut and continued pressure on average revenue per user are likely to result in "another quarter of sharp sequential revenue decline for the incumbents".
It has also cautioned that Bharti Airtel may see net loss, its first in many years.