Telcos' debt to rise to Rs 4.7 lakh crore by 2022 despite tariff hikes, says ICRA
The reason behind the rise in debt levels of telcos is because of the accumulation of AGR (Adjusted Gross Revenue) liabilities in debt, besides the proposed spectrum auctions, ICRA said in a report
- Dec 21, 2020,
- Updated Dec 21, 2020 10:12 PM IST
Telecom companies in India are likely to witness a rise in their debt levels to Rs 4.7 lakh crore by March 2022 despite tariff hikes, according to estimates by domestic ratings agency ICRA.
The ratings firm also stated that the tariff increase is expected to drive revenue growth in FY2022, touching Rs 220 ARPU (Average Revenue Per User) in the medium term. ARPU is an important metric to track the performance of the telecom operators. It is the amount of money the average user contributes to revenue.
"Debt continues to remain the Achilles' heel of the industry. Although sizeable deleveraging was done in FY2020, which along with moderation in capex intensity has resulted in a decline in debt to Rs. 4.4 lakh crore as on March 31, 2020; and though improvement in cash flow generation is anticipated, the debt levels are expected to increase further to Rs. 4.7 lakh crore as on March 31, 2022," ICRA said in a report.
Telecom companies in India are likely to witness a rise in their debt levels to Rs 4.7 lakh crore by March 2022 despite tariff hikes, according to estimates by domestic ratings agency ICRA.
The ratings firm also stated that the tariff increase is expected to drive revenue growth in FY2022, touching Rs 220 ARPU (Average Revenue Per User) in the medium term. ARPU is an important metric to track the performance of the telecom operators. It is the amount of money the average user contributes to revenue.
"Debt continues to remain the Achilles' heel of the industry. Although sizeable deleveraging was done in FY2020, which along with moderation in capex intensity has resulted in a decline in debt to Rs. 4.4 lakh crore as on March 31, 2020; and though improvement in cash flow generation is anticipated, the debt levels are expected to increase further to Rs. 4.7 lakh crore as on March 31, 2022," ICRA said in a report.