New Delhi: Bharti Airtel’s results may mark low point for telcos but some of the pressure on incumbent operators should begin to fade in 2018, as the intense competition sparked by Jio’s entry begins to ease, said Fitch on Monday.
Airtel last week posted over 39 per cent fall in consolidated net profit to about Rs 306 crore for the third quarter.
“Bharti Airtel’s rating headroom will narrow due to lower cash generation and high capex requirements in FY18,” said Fitch Ratings.
It said that the outlook for the telco sector is improving, which could mean that the results in the quarter ended December 2017 marked a low point for Bharti and other incumbents.
“We revised the sector outlook to stable in 2018 from negative in 2017, as we expect competition to ease now that industry consolidation is all but completed,” said Fitch.
Three large telcos — Bharti, Jio and merged entity of Vodafone-Idea — have emerged from the shake-out, it said.
Their combined revenue market share will increase to around 90 per cent in 2018, from 80 per cent in 2017, as smaller telcos continue to exit, it said.
“Industry revenue growth is likely to be in the mid-single-digits, after a decline in 2017. The current low industry tariffs are unsustainable, and we expect they rise in 2018, as Jio switches its focus from gaining customers to making reasonable returns on its investment,” added Fitch.
