Tariff hikes can double telcos operating profit in FY21

The steep tariff hikes, effected earlier this month by the battered telcos which held prices at rock bottom levels for nearly five years, can help more than double their operating profit to Rs 60,570 crore in FY21 from Rs 29,450 crore in FY19, says a report.

It is a “structural positive” for the sector which has been weighed down by weak cash flows and mounting debt levels, leading domestic ratings agency Crisil said on Monday, adding the hikes are a good opportunity for the industry to “repair its financials and become sustainable”.

In the aftermath of the adjusted gross revenue order by the Supreme Court that favoured the government view, all the major telcos hiked subscriber tariffs by up to 40 percent, starting with the prepaid customers.