Telecom industry to see revenue growth of 7-9% in FY24

ICRA suggests a 7-9% growth in the telecom industry in 2024, driven by increased pace amid expected debt levels between Rs. 6.1-6.2 lakh (2024) & lower average revenue per user (ARPU). 

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Due to the subdued average revenue per user (ARPU) growth and the lack of near-term pricing increases, the telecom industry is predicted to post a moderate revenue rise of between 7-9% in FY2024 over FY2023, according to ICRA. The ICRA predicts that the rollout of 5G networks has accelerated recently, with operators expanding their services in specific areas.

The rollout, involving significant fibre deployment and network densification, is expected to increase capital intensity and maintain high debt levels in March 2024. The three telecoms’ combined achievement of 75% to 80% 4G subscriber penetration, or around 800 million 4G users, has effectively plateaued customer upgrade. Additionally, the telecoms’ 5G services have not yet been monetized, and there are no 5G-specific plans, which may have increased ARPU levels. These elements, together with the lack of tariff increases, are anticipated to moderate ARPU growth, according to Ankit Jain, Vice President and Sector Head, Corporate Ratings, ICRA Ltd.

ICRA predicts ARPU industry revenue growth of 7-9% in FY2024, resulting in OPBDITA expansion of 9-11% compared to FY2023. The telecom industry is increasing spending on fiberisation and setting up 5G network sites.

ICRA predicts a peak in capex intensity in FY2024 and FY2025, with an overall spend of around Rs 3 lakh crore over the next 4-5 years. The ICRA predicts a moderate increase in deferred spectrum debt in FY2023, with debt/OPBDITA improving to 4.2x and interest coverage to 2.9x for FY2024, with further improvement in FY2025. The next phase of growth may come with 5G subscribers.