India Ratings and Research (Ind-Ra) in its latest credit news digest has said even after the tariff hikes, the competitive pressure for telecom companies (telcos) remains high since Reliance Jio Infocomm's data tariffs are still 25 percent lower than those of Bharti Airtel and Vodafone Idea. On a quarter-on-quarter basis, it said the industry revenue rose by 9 percent in Q3 FY20 supported by tariff hikes, which has more than offset the decline in the subscriber base in the given quarter.
According to the report, after almost two years, revenue grew across all the major telecom companies in 3QFY20. However, it said this momentum needs to be monitored. It said this is because apart from tariffs, revenue depends on subscriber base which declined in November and December 2019. It also stated that the recent tariff hikes have resulted in an increase in average revenue per user (ARPU) of all three major telcos in the range of 2 to 7 percent quarter-on-quarter. It said the share of broadband subscribers in the overall subscriber base is also on a constant rise. It added that the rising share of data subscribers along with growing data traffic and stabilising data tariffs augurs well for revenue growth.
Additionally, Ind-Ra opined that the release of a consultation paper by Telecom Regulatory Authority of India to evaluate setting up floor prices for telecom tariffs and extension of the implementation of zero interconnect usage charge regime by a year are positive moves for the telecom industry.