Out of the woods: Telecom industry AGR back on growth path

Out of the woods: Telecom industry AGR back on growth path

The worst seems to be over for the telecom industry if one goes by the trend of adjusted gross revenue (AGR) of telecom operators. AGR has been rising steadily for over the last two and a half years, going up to Rs 53,510 crore in the July-September 2021 quarter, the highest so far. In fact, the last time AGR crossed the Rs 50,000-crore figure was in April-June 2016, when it stood at Rs 53,383 crore.

Rising AGR is also a good sign for government revenues from the sector as operators pay licence fee at 8% of their AGR.

The AGR declined to Rs 50,539 crore in July-September 2016 and after that there was a decline for several quarters as Reliance Jio had entered the market, leading to a tariff war among telcos.

The industry started to stabilise in July-September 2019, and since then the AGR has been rising continuously, barring the April-June 2020 quarter when it declined marginally due to freebies offered by telcos to low-income subscribers during the pandemic.

The year 2021 can be termed a buoyant year for the Indian telecom sector. As work from home became the norm, the industry has seen its revenue reach new heights and all operators managed to increase their revenues.

As per a report by CLSA, 2021 saw the Covid-19 second wave and lockdowns, yet telecom sector revenues increased 15% (22% adjusted for end of interconnect usage charge/IUC) led by increase in 4G penetration to 66%, tariff hikes and rising data usage.

The report further said mobile sector revenues would grow again in 2022 led by year-end prepaid tariff hikes of 20% by all the operators. Bharti led the tariff hikes, and was followed by Vodafone Idea and Reliance Jio. Also, with mere 46-60% of Vodafone Idea and Bharti mobile subscribers on 4G, incumbents will see average revenue per user (Arpu) boost from rising 4G penetration. Besides Vodafone Idea’s financial crisis has been averted following the four-year moratorium on government payments of spectrum and AGR.

Check the source here –Source, Financial Express.