Telecom companies need to cut debt quickly as leverage is high: Analysts

Kolkata: Reliance Jio Infocomm has outperformed older rivals Vodafone Idea and Bharti Airtel in the fiscal third quarter, but all three mobile phone companies need to reduce debt in a hurry with leverage at uncomfortably high levels, say analysts.

While Jio showed strong revenue and profit growth in the October-December quarter, both incumbents have shown early signs of revenue recovery with initial effects of the minimum recharge plans kicking in, coupled with strong 4G subscriber additions, despite posting losses for their India operations.

With a net debt to earnings before interest, tax, depreciation & amortization (Ebitda) of over 25x, reducing liabilities holds the key to Vodafone Idea’s ability to expand 4G operations to catch up with competition, say analysts. They add that Jio’s similar ratio, which is around 6.9x,