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Credit rating agency ICRA has revised its outlook of the telecom services sector from Negative to Stable. The rating agency stated the telecom tariff hike along with the recent relief package offers sufficient headroom for the industry to undertake deleveraging as well as fund capex for 5G tech upgrade. It mentioned the telecom industry has implemented the long-awaited tariff hikes which have the potential to improve the industry ARPU levels to around Rs 170 by the end of 2022-23.

Further, it said the latest round of tariff hikes where telecom companies increased the prepaid tariffs by around 20 per cent will provide much-needed traction in the ARPU levels. It stated ‘We expect the industry revenues to grow by 18-20 per cent in 2022-23, followed by a growth of 10-12 per cent in 2023-24, which given the high operating leverage, is likely to translate in healthy expansion in operating profits, the same are projected to grow by around 30 per cent in 2022-23.’

Besides, it added while the moratorium on the dues would impact the non-tax receipts of the government from the telecom sector, two telcos have pre-paid their dues towards earlier spectrum auctions totalling to Rs 26,300 crore thereby making up for the loss to the government. It estimated for 2021-22, the telecom sector is expected to contribute around Rs 54,000 crore to the government's non-tax receipts which will be close to the budgeted estimate for the fiscal. However, it warned debt continues to remain the ‘Achilles' heel’ of the industry. It expected industry debt levels to remain at around Rs 4.7 lakh crore as on March 31, 2022, before moderating to Rs 4.5 lakh crore as on March 31, 2023.