Long-term view on telcos: Not so dismal
Has the telecom growth story stopped? The answer depends on how you look at company revenues.
If comparing quarter on quarter, worrisome for both telcos and the government. But, if you look at it year on year, much less dismal than made out to be, revenues in line with GDP growth
Based on Telecom Regulatory Authority of India (Trai) data released last week, the gross revenue of wireless telecom companies for the quarter ended September fell 0.7 per cent, from the Rs 39,907 crore in the quarter ended June to Rs 39,619 crore in September-end. If you look at the whole industry (including revenues of ILD, NLD and ISPs, and VSAT), growth in the same period was less than one per cent.
During the same period, the spectrum and licence fee — the cash cow the government uses to dress its budgetary deficit — paid by telcos also fell. Telcos paid licence fees of Rs 2,839 crore in the quarter ended September, a drop of 1.8 per cent over the previous one. Spectrum fees dropped 0.45 per cent in the period. The government’s earning from licence fees, excluding ILD, NLD and ISPs, and VSAT, dropped 6.3 per cent to Rs 2,301 crore during the quarter ended September, against Rs 2,456 crore the previous quarter.
But if you look at the numbers year on year, the story, at least based on the revenue figures, might not be so dismal. In the Union budget, the government had estimated telecom revenue of Rs 58,217 crore, of which Rs 40,000 crore was to come from sale of spectrum and one-time fee. The rest (Rs 18,217 crore) was to be generated by spectrum and licence fee from existing operators. Based on Trai data for the past six months (April-September), the government — despite the crises in the sector after the Supreme Court decision and closure of many players — has been able to muster 45.6 per cent of its target, with six more months to go. One could assume it might be just short by five per cent of its target in another six months.
Also, despite the fear of revenues tapering due to many operators deciding to call it a day, the industry in the quarter ending September saw revenue grow 5.9 per cent, compared to the same quarter last year. In this period, revenue from spectrum and licence fees saw growth of 4.4 per cent.
Of course, the operators say there has been no real revenue growth, if one takes into consideration an eight per cent yearly inflation. “Operators have not been able to pass on the increase in costs to users and government earnings will also come down, as revenues are not growing,” says Rajan Mathews, director general of the Cellular Operators Association of India.