“Fitch has a negative outlook on the sector for 2020 primarily due to heightened financial risk associated with the large unpaid AGR-related dues,” the New York-based firm in a statement said.
The Cabinet has on Wednesday deferred spectrum payments to two years providing interim relief of Rs 42,000 crore to the industry<\/a>, following the Supreme Court ruling asking telecom companies to pay dues within the three months.
Fitch, however, believes that the decision by all three private companies to raise tariffs from December 2019 and a two-year moratorium on payment of spectrum dues were positive for the industry but are unlikely to be sufficient to offset the impact of a recent Supreme Court judgment for incumbents— Bharti Airtel<\/a> and Vodafone Idea<\/a>.
Early this week, incumbents— Bharti Airtel, Vodafone Idea and Reliance Jio<\/a> said that they would increase their tariff from December 2019— a move soon followed up with Cabinet allowing a two-year moratorium on spectrum payouts.
The developments come on the close heels of the top court verdict settling a decade-and-a-half long dispute between the telecom companies and the Department of Telecommunications (DoT), asking the former to pay as much as 1.40 lakh crore.
The industry, sitting on a cumulative debt of Rs 7.5 lakh crore, has unsustainably the low monthly average revenue per user (ARPU<\/a>) at nearly Rs 120, according to the US-based agency.
“The divergence between Bharti's and Vodafone Idea's financial performance continued in 2QFY20, while Jio continued to report strong revenue and EBITDA growth,” Fitch added.
Vodafone Idea's 2QFY20 revenue and EBITDA, according to the agency, declined further quarter-on-quarter by 4% and 15%, respectively as the telco lost nearly 9 million customers while its blended tariff was flat.
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