Analysts and industry executives say the sharp depreciation of the rupee against the US dollar could have a major impact on the telecom sector in FY2023. There will also be a marginal increase in interest payments on dollar loans. He said that in such a situation, telecom companies can increase another tariff by the end of this year. That is, if there is this increase, then the users will have to go through the high costs of recharge.
Experts estimate that there is a possibility of around 10% increase in the price increase of the tariff. This could lead to a cut in the consumption of mobile broadband services, which means that it will hurt the revenue of telcos in the coming quarters.
Significantly, the Indian rupee has reportedly moved above the psychologically important USD 80 in over-the-counter and derivatives markets. Rates have been hiked by 100 basis points at the end of this month to control inflation. On the other hand, the rupee was trading at Rs 79.90 against the greenback on Friday.
According to a report in ET, Nitin Soni, senior director of global rating agency Fitch, said the network for telcos could grow by a maximum of 5 per cent (on-year) due to the depreciating Indian rupee. There will be an increase in the interest rate of the rupee against the dollar. However, he says the overall interest cost of Sunil Mittal-led Airtel will come down in FY2023 on account of debt reduction.
One does not expect the rupee loss to pose a “significant risk” to Airtel’s interest costs. Because Airtel has only $5.1 billion in debt in US dollars, or 29% of its total debt. However, analysts said Vodafone Idea’s dollar loan is likely to be very modest as its Rs 1.96 lakh crore net loan includes deferred spectrum and AGR (adjusted gross revenue-related) related liabilities to the government.
Experts say that between the rising cost of mobile services and fewer 4G users being added due to lower sales of low-cost smartphones, Airtel and Vi will add fewer users. Jio is expected to grow its subscriber base and report strong growth in the first quarter of the financial year.