India telecom sector Capex is likely to remain flat in FY22 as both Airtel and Jio front-loaded investments to expand 4G coverage and capacity and built up fibre networks and in-building coverage, Fitch Ratings said.
Airtel could generate small positive free cash flow in FY21, as operating cash generation is likely to rise and will be used to fund flat core capex, excluding one-time spectrum payments and adjusted gross revenue dues.

Airtel and Jio are likely to bid to renew their expiring spectrum in the upcoming auctions in March 2021 and may also bid to acquire spectrum in the sub-1GHz band, which can be used for 5G services.

Airtel will set aside $500 million in FY21 and $1 billion in FY22 for upfront spectrum investments. The company is unlikely to launch 5G services before 2022.

Vodafone Idea, the third largest telecom operator in India, will lose 50 – 70 million mobile subscribers in the next 12 months, Fitch Ratings forecasts.

Reliance Jio and Bharti Airtel will likely increase their combined revenue market share to 80 percent from around 75 percent in December 2020.

Bharti Airtel has added 25 million mobile phone customers to its network to reach a total subscriber base of 308 million in 2020.

Jio, which leads the mobile market with 411 million phone customers on its 4G network, added 41 million subscribers during last four quarters.

The Indian telecom industry’s mobile segment EBITDA to increase by at least 40 percent in the financial year to end-March 2021 (FY21), compared with 25 percent in FY20, following strong performances by market leader Reliance Jio and Bharti Airtel.

EBITDA growth at Jio and Bharti will be driven by higher tariffs, user migration to 4G and high monthly data usage of 12GB-16GB per user as pandemic-led restrictions encouraged users to work from home and use remote-access technologies.

Jio’s revenue and EBITDA grew by 33 percent and 50 percent, respectively, yoy in 9MFY21. Airtel has reported Indian mobile revenue and EBITDA growth of 26 percent and 48 percent, respectively, during the same period.

Vodafone Idea’s ARPU is 30 percent lower than Airtel India’s ARPU.

Jio increased its monthly average revenue per user (ARPU) by 18 percent yoy to INR151 (USD2).

Airtel reported 23 percent rise in monthly APRU to INR166, driven by 34 percent growth in 4G customers to 165 million.

Airtel achieved 20 percent growth in monthly data usage per user to 16.7GB, and a 14 percent rise in voice usage to 1,027 minutes.

Fitch Ratings forecasts industry monthly ARPU to grow by 5 percent-10 percent in FY22 as 2G and 3G customers gradually move to pricier 4G price plans. Another tariff increase is possible in 2021 because the struggling Vodafone Idea.

Vodafone Idea may raise cellular tariffs to improve cash flows.

Migration of users to 4G services will accelerate as Indian smartphone shipments sharply rebounded in 2H20, according to analysis firm Canalys.