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Telecom sector may not recover next fiscal: Ind-Ra

New Delhi: The telecom sector is unlikely to witness any meaningful recover in FY20, said India Ratings and Research (Ind-Ra).

India Ratings and Research (Ind-Ra) has maintained a negative outlook on the telecommunications services sector for FY20.


The ratings agency said that the pricing recovery in FY20 is unlikely to be sufficient to compensate for the revenue loss witnessed in the preceding two years. “The EBITDA for the top two private telcos will improve but not to the extent that it would lead to any meaningful recovery in their standalone credit profiles,” it said.

It expects Reliance Jio Infocomm’s (RJio) dominance to increase as it would continue to seize market share in terms of both subscribers and revenue from Bharti Airtel and Vodafone-Idea in FY20 and could eventually emerge as the largest telecom player in the country.

Given the continued capex commitments, refinancing requirements would remain high for all the players. “As a result, free cash flows would remain negative in FY20. The aggregate net debt of Bharti, Vodafone-Idea and RJio at end-FY19 is estimated to be around `3 lakh crore, implying net leverage of over 6x for the sector. Telecom companies will continue to require equity infusion and asset monetisation to deleverage,” the ratings agency said.

“Post consolidation, there are three private and two public sector players (BSNL and MTNL) in the telecom industry,” said Ind-Ra.