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March 01, 2019

Sector Report: Telecom Services

This report is available to users in India for ₹40,000 + applicable taxes


Table of Contents


  • Summary
  • Wireless
  • Wireline
  • Operating metrics
  • Revenues
  • Profitability
  • Competition
  • Regulations
  • Investments




Industry revenue likely to recover in fiscal 2020; pricing to remain a keymonitorable


Revenue of the Indian telecom services industry is expected to remain sluggish in fiscal 2019, because of deterioration in data realisation amid the tariff slash. After a 10% decline in fiscal 2018, the industry's gross revenue is estimated to drop a ~15% in fiscal 2019.


However, in fiscal 2020, CRISIL Research expects the gross revenue to recover ~10%, led by improving realisation, ashigher data volumes offset marginal drop in prices. The introduction of minimum recharge plans by incumbents will certainly push up their average revenue per unit (ARPU), as subscribers enjoying free incoming services will need to go in for minimum recharges to avail of the services. The industrys adjusted gross revenue (AGR), on the other hand, is expected to grow 16-18% in fiscal 2020, as the IUC (interconnect usage charge) payout will decline much sharper, as the charges are due to get abolished from January 1, 2020. However, the pricing of newer packs remains a key monitorable. We believe that Reliance Jio would be aggressive in pricing in circles where it doesn't have a leadership position


Rural tele-density likely to cross 70% by fiscal 2023, only driver for subscriber addition


The wireless subscriber base in India is expected to decline to ~1,155 million by the end of fiscal 2019, led by subscribers who were availing of the service of both operators before the merger. However, once inactive subscribers get deactivated, subscribers are expected to grow at a CAGR of a nominal 2-3% over fiscals 2018 to 2023. Majority of the subscriber addition will be in under-penetrated rural areas with a rural tele-density of 58.5% as of September 2018, giving scope for operators to expand services in these areas. The rural tele-density is expected to reach 70% by fiscal 2023.


The wireless-subscriber base stood at ~1,169 million in September 2018, an on-quarter increase of ~23 million. The consolidation of large telecoms in the industry has led to a decline in their net subscriber addition, as subscribers inactivate multiple SIMs and switch to primary SIM cards. CRISIL Research believes that only 80-85% of subscribers that smaller players lost migrated to larger players. The balance 15-20% moved out of the industry. Most of them are believed to be dual-SIM users in urban areas, who switched to using only their primary SIM card.