NEW DELHI: The Indian telecom sector will require one more year for complete revival, according to a Jefferies report on Wednesday.
Noting that telecom companies plan to raise around Rs 1 lakh crore in the first half of 2019-20, the report said although the fund flow would reduce leverage of Bharti Airtel and Reliance Jio, it would not be adequate for Vodafone Idea.
Vodafone Idea and Bharti Airtel have recently announced rights issues of Rs 25,000 crore each along with other monetisation steps.
“With Jio’s focus remaining on subscriber addition, market repair is still 12 months away. As we expect VodaIdea’s market share to go below 25 per cent over the next 18 months, it will require additional funding in FY21,” it said.
“Bharti Airtel will see lowering of leverage post-fundraising and will, along with Jio, be better positioned to compete,” it said.
While Vodafone Idea’s market share will fall to 20 per cent, Bharti Airtel’s will remain steady at 30 per cent by FY22. Competitive intensity in the near term will remain high especially in the postpaid segment, it said.
The report said price hikes were unlikely this financial year and would happen only once Jio became the dominant player with over 40 per cent market share, likely to happen in FY21.
“After FY20, we expect ARPU (average revenue per user) to rise gradually and it will be accompanied by increased investment in add-on services and network. Consequently, capex will remain high,” Jefferies report said.