Telecom weathers Covid-19 storm in good shape

NEW DELHI:  Telecom seems to be one of the few sectors which have managed to shrug off the crisis spawned by the pandemic—though massive litigation-related provisions still managed to push two of the three private telcos into heavy losses in Q1FY21. Bharti Airtel and Vodafone Idea posted net losses of Rs 15,933 crore  and Rs 25,460 crore respectively.

But Reliance Jio, the only private operator free from the AGR-related millstone around its rivals’ necks, managed to record a whopping 183 per cent y-o-y jump in net profit during the quarter.

 In fact, taking aside the AGR-related provisions, Bharti Airtel and Reliance Jio have both recorded significant improvements in operational and profitability metrics for the quarter—far removed from the plunge the general economy took after the lockdown beginning March 24. 

Airtel’s India revenues rose 14.6 per cent and consolidated revenues by 15.4 per cent year-on-year, while EBITDA rose 25.3 per cent. Its average revenue per user (ARPU)—a key measure of profitability—rose sharply from Rs 129 in the previous quarter to Rs 159 in Q1. Reliance Jio, for its part, saw revenue from operations grow by 33.7 per cent y-o-y, to reach Rs 16,557 crore ARPU rose to Rs 140.3 compared to Rs 130.6 for the March-quarter. 

But rival Vodafone Idea is not doing as well. It has failed to capitalise fully on the tariff hikes rolled out in December last year by the whole industry. Its revenue from operations declined 5.4 per cent to Rs 10,659 crore, primarily driven by a sharp fall in new subscriber additions. 

Despite this, analysts see the sector doing better overall. “Indian telcos are likely to weather the coronavirus-led slowdown... we forecast the industry mobile segment’s EBITDA to grow by 25 to 30 per cent year-on-year (FY20: 25 per cent) despite expectations for Indian GDP to contract by 5 per cent during this period,” said Fitch Ratings.