The government’s ambition to launch 5G in India in near future looks challenging as the telecom sector battles with statutory dues and rock-bottom revenues, CARE Ratings said.
“The incumbents that are battling the tough situation of AGR (Adjusted Gross Revenue) payments are likely to move at a slow pace with their investment plans towards 5G with the current low level of ARPU (Average Revenue Per User),” the ratings agency said in a sector update on Monday.
The average ARPU stood at Rs 74 during April-September 2019 compared to that of Rs.124 in FY16 when the industry was getting 4G ready.
“Also, the reserve price suggested by TRAI (Telecom Regulatory Authority of India) for bands that could be used for deployment of 5G technology did not find much support from the industry due to its higher price,” the report said.
The agency expects industry ARPU to rise by 12 percent -14 percent to Rs 78-Rs 79 in this fiscal due to tariffs hikes of 40 percent by the three telcos in December 2019.
Post the Supreme Court’s judgement on AGR, dated October 24, 2019, the country’s two big telcos Vodafone Idea and Bharti Airtel were hit by dues of Rs 53,039 crore and Rs 35,586 crore respectively to be paid to the Department of Telecommunication (DoT). While Bharti Airtel’s self-assessment amount was about 50 percent lower than the DoT’s claims, that of Vodafone-Idea was 60 percent lower.
CARE Ratings also said that the Supreme Court’s decision to dismiss telcos’ self-assessment figures will be detrimental for the sector.
“After this decision, the incumbents continue to face headwinds and will stand at the same position as they were when the new definition of AGR was accepted.”