Stating that telecom industry will see three large, strong telcos in the market, Fitch Ratings on Wednesday said that the telecom industry structure has now corrected. “We expect that Reliance Jio will raise tariffs in the medium term,” it told ET Now. Reliance Jio has already announced the offers and tariff plans for its network service, which will be applicable from April 1, this year. After March 31, users will not get everything for free. In order to continue using the previous ‘Happy New Year’ offer, Jio users will have to pay a subscription fee of Rs 99. Additionally, they will have to shell out Rs 303 every month to continue accessing Jio’s 4G services and also the full bouquet of Jio’s media services for one year. Similar to the previous ‘Happy New Year’ offer, the Prime membership too will provide users with a FUP limit of 1GB data for each day. A consumer who still does not have a Jio connection can get on the network on or before March 31 in order to avail the Prime membership offer.
Meanwhile, intense competition in the domestic telecom space has not only impacted the revenue and margins of the operators, but also the industry debt, which is expected to rise by as much as 9.75% to R4.50 lakh crore by the end of the current fiscal compared to 2015-16 fiscal. Rating agency Icra estimated that the total debt of the telecom industry will rise from R4.10 lakh crore in March 2016 to up to R4.50 lakh crore by March-end this year.
Icra’s sector head of corporate ratings, Harsh Jagnani told FE, “The big concern for the industry, the big reality is the debt levels. As of March 2016, we had pegged it at R4.10 lakh crore and we had anticipated the industry to end the year, somewhere at 4-4.50 lakh crore and it looks likely that it will end at that level. Debt repayments will remain a concern for the industry.”
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He added that the industry’s debt-to-ebitda level is expected to be upwards of 5.6, driven largely by spending by operators in the October 2016 spectrum auctions. Jagnani put the spectrum auctions as one of the major reasons for the increase in debt levels, but which was a requirement too.