Telcos revenue rising but accumulated debt eating into it: Moody’s

NEW DELHI: Telecom companies’ earnings are stabilizing but leverage will remain elevated as significant fees owed to the government will likely be debt funded, Moody’s said on Thursday.

Funding of Department of Telecommunications dues will push debt higher and profitability will remain muted, it said.

Moody’s said ARPUs are on the rise for both Bharti and Vodafone.

Average revenue per user (ARPU) is rising, which will be helped further with expected tariff hikes beginning in December 2019. Cash flow will remain under pressure as cash obligations are likely to rise (higher interest costs, DoT payments, ongoing capex), although moratorium on spectrum payments over the next two years will provide some relief Companies of interest, it noted in its report.