Telecom services industry revenue growth may slow to 7-9% in FY24: ICRA

economictimes.indiatimes.com:

Telecom services industry is expected to report moderate revenue growth of around 7-9% in FY2024 over FY2023 due to muted average revenue per user (Arpu) expansion in the absence of tariff hikes, ratings agency ICRA said today. The capex levels of telecom firms will remain elevated as they expand 5G coverage and this would keep the debt levels of the industry high at around Rs 6.1-6.2 lakh crore as of March 2024.

As per ICRA, the 5G rollout entails densification of the network and sizeable deployment of fibre, which is likely to increase the capex intensity in the near to medium term. “The 5G services launched by the telcos have not been monetised and there are no 5G specific plans, which could otherwise have boosted Arpu levels.

These factors, combined with the absence of tariff hikes, are likely to result in a moderation in Arpu growth,” Ankit Jain, Vice President and Sector Head, Corporate Ratings, ICRA said. The ratings agency expects industry Arpu to improve to Rs 182-185 for FY2024 from Rs 175 in FY2023.

Apart from setting 5G sites, the telcos are also increasing their spends on fiberisation as full scale 5G deployment will entail densification of network and thus sizeable investments in the same. ICRA expects the telcos to front load the capex in FY2024 and FY2025 causing the capex intensity to peak during this period and moderate thereafter.

“The industry has been upfronting 5G capex and ICRA foresees industry capex at around Rs 70,000 crore for FY2024 within an overall spend of around Rs 3 lakh crore over the next 4-5 years,” Jain said. Further, it has been said that the next phase of growth might kick in for the telcos once more subscribers join the 5G bandwagon, and telcos monetise this by releasing