Revenue growth of Indian telcos to slow down in FY21 due to pandemic induced slowdown: Fitch

Revenue and EBITDA growth of Indian telcos in the financial year ending March 2021 (FY21) will slow due to lower data growth and weaker economic activity amid the coronavirus pandemic, noted Fitch Ratings in a report today.

The ratings agency however expects the pandemic led slowdown to largely impact low average revenue per user (ARPU) base. The telcos have been struggling to ensure this base is able to recharge their subscriptions since the lockdown was first implemented in late March.

“Notwithstanding the effect of the pandemic, we expect FY21 industry mobile service earnings before interest, tax, depreciation and amortization (EBITDA) to increase by about 15% yoy….as the industry will realise the full-year benefit of industry-wide tariff hikes of around 30%, effective from December 2019. Telcos’ 4QFY20 EBITDA growth was driven by tariff hikes and 4G data growth, which we forecast to decelerate in FY21, as lockdowns were only implemented from 24 March 2020,” noted the report.