In India's ever-changing telecommunications sector, 2024 was a year of strategic adjustments and cautious optimism for industry. In a recent report on Indian telecom industry by Icra the following remarks were made.
The recent spectrum auctions have received low participation, which is sync with Icra's projections. The primary focus was on renewing expired spectrum licences and improving network coverage. Telcos together invested Rs 11,341 crore in spectrum, which is unlikely to have a substantial influence on the industry's financial performance.
The recent tariff rises are expected to improve operational metrics in the industry. Although ARPU (Average Revenue Per User) growth slowed in FY2024 due to the lack of pricing changes and specialised 5G plans, recent tariff revisions are expected to raise ARPU to Rs. 200 by FY2025, resulting in a predicted 12 to 14 per cent increase in operating revenue. Icra expects industry sales of Rs 3.2 to 3.3 lakh crore, with an OPBDITA of Rs 1.6 to 1.7 lakh crore for FY2025.
The industry's 5G deployment has faced hurdles such as significant upfront capital expenditures in FY2024, despite the lack of compelling retail use cases, pricey consumer equipment, and poor fiberisation rates. In the future the intensity of 5G investments is likely to stabilise beginning in FY2025.
Altogether, low auction participation and targeted tariff revisions are expected to dramatically improve the telecom sector's debt metrics. Icra forecasts a slight reduction in overall industry debt to Rs 6.2 to 6.3 lakh crore by 31 March, 2025, with debt/OPBDITA (Operating Profit Before Depreciation, Interest, and Taxes) increasing to 3.7 to 3.9 times and interest coverage to 3.1 to 3.3 times in FY 2025. These achievements point to a healthy picture for the industry's financial stability and operational progress in the coming fiscal year.
