Outlook negative for most Indian telcos: Fitch

Dylan Bushell-Embling
18 Nov 2011
00:00
News
Daily News

Most Indian telecom operators will continue to suffer operating losses next year, as a result of intense competition and low ARPU, Fitch Ratings has warned.


The credit rating agency assigned an overall negative outlook to the Indian telecom sector in a special report.

The six smaller operators and state-owned telecom firms BSNL and MTNL are expected to continue to suffer operating losses in 2012 due to high competition and low ARPU, Fitch said.

The top four private telcos – Bharti Airtel, Vodafone Essar, Idea Cellular and Reliance Communications – should be in a position to improve their credit metrics in 2012, largely as a result of the end to the mobile tariff price war.

But these operators remain exposed to significant regulatory risk, including how the government's proposed New Telecom Policy - due to be announced in January 2012 – turns out. Fitch also has Bharti's credit rating on a negative outlook.

On the positive side, mobile tariffs and ARPU are expected to remain stable through next year as a result of the more stable pricing environment, and this should lead to higher revenue growth in 2012 compared to 2011.

The government's plan to help facilitate mergers and other forms of consolidation could also be good news for the industry, Fitch said.

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