{"id":100719,"date":"2018-11-19T18:02:22","date_gmt":"2018-11-19T18:02:22","guid":{"rendered":"https:\/\/www.bnreport.com\/telecom-price-wars-to-ease-industry-blended-arpu-to-recover-3-5-in-2019-fitch\/"},"modified":"2018-11-19T18:02:22","modified_gmt":"2018-11-19T18:02:22","slug":"telecom-price-wars-to-ease-industry-blended-arpu-to-recover-3-5-in-2019-fitch","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/telecom-price-wars-to-ease-industry-blended-arpu-to-recover-3-5-in-2019-fitch\/","title":{"rendered":"Telecom price wars to ease, industry blended Arpu to recover 3-5% in 2019: Fitch"},"content":{"rendered":"

KOLKATA: Competition levels in the telecom sector are set to ease significantly next year and the industry blended average revenue per user (ARPU<\/a>) likely to recover some lost ground with Reliance Jio<\/a> slated to pursue a less aggressive pricing strategy in calender 2019, global ratings agency, Fitch said. <\/p>\n

\u201cWe believe industry blended ARPU \u2014 currently at around Rs 100 \u2014 has bottomed out and expect it to recover by 3-5% through calender year 2019 as Jio gradually reduces discounts and promotions,\u201d Nitin Soni, director (corporates) at Fitch told ET. <\/p>\n

Going forward, Fitch expects the Mukesh Ambani-led telcos revenue market share (RMS) growing steadily to around 30% \u2014 from 22.4% at the end of June. A scenario, it said, that would lead to the emergence of \u201cthree broadly equal-sized telcos \u2013 Vodafone<\/a> Idea, Bharti Airtel<\/a> and Jio \u2013 together holding 93-95% RMS by end-2019. <\/p>\n

Soni expects \u201ca stabler outlook\u201d for the Big 3 telcos as he sees Jio \u201cdiscontinuing discounts to boost returns on its over $40 billion investment\u201d. <\/p>\n

Reliance Jios disruptive pricing since its entry more than two years ago forced the older carriers to match rates to hold on to customers, galvanising consumption of voice and data services. Fringe players that couldnt withstand the brutal price wars exited and the industry consolidated down to three large private players\u2013Vodafone Idea and Bharti Airtel among the older ones and Jio \u2013 making it an ideal market situation for pricing power to return over time. <\/p>\n

Fitch now expects \u201cwireless blended tariffs to rise,\u201d driven primarily by \u201ca gradual increase in data realisations with steady demand growth\u201d. <\/p>\n

The international rating agency, however, expects \u201ccompetition to intensify in the home broadband segment\u201d with Jio poised to launch its ultra fast fibre-to-the-home services nationally soon under the GigaFiber brand. <\/p>\n

Credit Suisse<\/a> recently said the recent buyout of cable TV operators, Den Networks and Hathway<\/a> Cables would give Jio a headstart in the home broadband turf, which could pose a threat to Bhartis non-mobile businesses \u2013 namely, home broadband and digital TV. <\/p>\n

Going forward, Fitch expects the older incumbent carriers to \u201craise equity and monetize their tower assets\u201d to strengthen their stretched balance sheets shortly. <\/p>\n

Last week, market leader Vodafone Idea announced plans to raise Rs 25,000 crore through equity and more by selling its fibre network assets, moves likely to bolster its balance sheet, help it catch up on capex and defend turf in its fight against Jio and Airtel. Second-largest telco Airtels Africa arm too has raised $1.25 billion (Rs 9200 crore) by issuing shares to six global investors at part of a two-stage fund raising exercise to cut debt. The second stage will be an Airtel Africa<\/a> initial public offer to raise a similar sum around May-June next year. <\/p>\n

Fitch, however, said \u201cBharti Airtel BBB-\/stable rating headroom would remain low,\u201d despite the near $1.25 billion capital raised by the partial sale of its Africa unit last month. <\/p>\n

<\/a><\/strong> <\/a><\/p>\n

Original Article<\/a><\/p>\n

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ET Markets<\/a><\/h5>\n

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