Domestic rating agency, ICRA in its latest report has said that Indian telecom sector’s revenue are likely to fall by another 6 percent to Rs 2.4 lakh crore in the financial year 2017-18, mainly due to heightened competitive intensity and pricing pressures. It also cautioned that the plunge could be sharper for smaller operators like Tata Teleservices, Aircel and Reliance Communications.
In addition, the rating agency has said that the GST rollout will further add to the woes for sector as the higher tax incidence would have to be absorbed by them leading to some additional pressure on cash flows. It expects that industry debt to rise from 4.6 lakh crore in FY17 to Rs 4.8 lakh crore in FY18, despite efforts to lighten the balance sheets. It noted that the pressure on cash flows on the one hand and the need for constant capex on the other, pose a challenge towards debt servicing.
According to the report, for FY18, non-spectrum debt is expected to be at Rs 3.1 lakh crore, while the spectrum debt is seen to be around Rs 1.7 lakh crore. Repayment burden for spectrum debt is likely to be Rs 25,300 crore per annum for the next two years and Rs 31,700 crore post that. The report added that the impact on the telecom industry’s financial health was visible in the second half of FY2017 post-RJio’s launch. It also estimates the situation to remain weak during this fiscal as well, as the pricing pressures show no signs of abatement.