DNA Money Edit: No recovery signals in sight for telcos

The woes of the telecom sector are expected to spill over to the coming year as well.  The industry is still recuperating from the disruption created by Mukesh Ambani-promoted Reliance Jio and the recovery may be delayed as intense competition is likely to persist. Stabilisation and pricing restoration are not imminent because competitive headwinds remain strong with most operators looking for greater entrenchment or a push for higher customer market share, as per an Icra report released on Tuesday. The rating firm maintained a negative outlook for the sector.

The number of internet users has been growing at a fast pace as access to data services and 4G-enabled handsets became affordable with the entry of Jio. India has over 1 billion mobile users, but 50-60% of them are still on the 2G network. This is the pie every telecom player will now be eyeing. Though data usage is rising, the margins or average revenue per user is falling.  The cumulative debt of the industry stands at around Rs 4.76 lakh crore and players need to invest continuously to upgrade and expand their 4G networks and even make their networks 5G-ready.

In the whole scenario, no doubt, mobile consumers have been the king. However, it will be a long journey for the incumbents, before a sense of normalcy is returned into the sector for them.