Telcos Staring at Another Difficult Year; Pretax Net to Fall 28% this Fiscal: Icra

Posted By: Religare
Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    Battered telcos are staring at another difficult year with domestic ratings agency Icra estimating an additional 6 per cent dip in growth and a massive 28 percent shave-off in pre-tax profit this financial year, reported PTI.

    Telcos Staring at Another Difficult Year; Pretax Net to Fall 28% this Fiscal: Ic

    This is over and above the 5 per cent decline in revenue to Rs 2.56 trillion in FY17, which pulled down their pre-tax profit by 10 per cent to Rs 64,000 crore.

    "Competition has impacted revenue generation and profitability of all the players in H2 of FY2017, after Rjio launch...We have a negative outlook on the sector," the agency's sector head Harsh Jagnani told reporters over a conference call.

    Even as the RBI has asked banks to increase provisions on telco exposures fearing asset quality issues, Icra said the total debt of the sector will grow by Rs 20,000 crore to Rs 4.8 trillion by next March.

    Banks have an exposure of Rs 1.1 trillion to the sector, as the rest of the debt is foreign currency- denominated and domestic corporate bonds.

    Without directly commenting on whether banks should expect any stress, he said debt servicing will be an issue with the liquidity gap widening to Rs 70,000 crore. The gap is calculated by taking into account the entire inflows and outflows.

    Apart from that, with the fall in pretax profits and rise in debt levels, there will be a deterioration in gross- debt to pretax profit ratio to over 10 times as of March 2018, it estimates.

    Jagnani also said rollout of goods and services tax is a negative for the sector but is not the biggest of the worries. The ongoing consolidation in the sector will help operators regain some pricing power which is waning at present, he said, adding this will not happen till the mid of 2018.

    Read more about: telcom icra tax
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more