According to a report by India Ratings and Research (Ind-Ra), Reliance Jio Infocomm Limited (RJIL) could emerge as the telecom leader in fiscal year (FY) 2019-20 as it would continue to capture the market share of Bharti Airtel and Vodafone Idea Limited (VIL) in terms of revenue and subscribers.

Further, the pricing recovery during 2019-20 would not be sufficient to compensate for the revenue loss experienced during 2017-18 and 2018-19. Moreover, the outlook for the upcoming financial year also showed that the refinancing requirements would remain high for all operators. As a result, free cash flows would remain negative in 2019-20.

Meanwhile, Ind-Ra estimated the aggregate net debt of Bharti Airtel, VIL and RJIL at end 2018-19 to be around Rs 3 trillion, thereby implying net leverage of over six times for the sector. Due to this reason, telecom operators will continue to require equity infusion and asset monetisation to deleverage their balance sheets.

The report also highlighted that the operator’s focus would eventually shift from average revenue per user (ARPU) to subscriber market share. To this end, the share of 4G subscribers, who offer higher ARPU, will be a critical profitability indicator and revenue market share will evolve accordingly. Also, revenue growth would be uneven across operators.

Furthermore, overall subscriber growth will remain muted during 2019-120, or it could even witness a decline, as the dual-SIM nature of the market changes to single SIM with ARPUs going upwards.

However, according to the report 5G spectrum auctions might get a lukewarm response from the sector since the ecosystem for it had not yet taken-off.