Telecom sector at an inflection point, outlook stable for FY25: Ind-Ra
5G subscriber base is expected to rise to 20-25% of overall users from around 17% now. But 5G adoption won’t be as fast as 4G because the average selling price of 5G smartphones is still 2-4x higher than normal smartphones, said India Rating and Research (Ind-Ra).
The ratings firm added that the Indian telecom industry was at an inflection point in fiscal 2024 with their investments in 5G networks and spectrum renewal having peaked to almost $20 billion. Thereafter, telcos would keep their investments subdued while possibility of tariff increase remains uncertain.
«The cash outflow towards spectrum renewal/acquisition could be a marginal drag on cash flows from FY25. Visibility on meaningful tariff hikes remains uncertain, since globally also 5G has not yielded any major tariff premium over 4G tariffs,” said Priyanka Bansal, associate director, Ind-Ra.
Bharti Airtel and Reliance Jio — the only two telcos to have rolled out 5G services — have guided that capex intensity would moderate from FY25 onwards as accelerated pan-India rollout of 5G was achieved by CY2023 offering 95% coverage.
Therefore, the telcos would now focus on improving return on capital investment by increasing headlines.
“Currently telcos are in a much better position to execute tariff hikes, given the improvement in service offerings (higher data quantum, higher speed, other auxiliary offerings, 5G speed etc) since the last tariff hikes”, she added.
“..return ratios (ROCE) and free cash flow will see a sharp improvement only in FY26, when
