Covid may hit telcos’ user gains in June quarter, delay tariff hikes

The newest spike in Covid circumstances and choose restrictions in drive in numerous locations are more likely to decelerate cellular user additions in the April-June quarter and delay tariff will increase by three to 6 months, analysts mentioned. Such a state of affairs may depart struggling Vodafone Idea (Vi) much more weak to greater user losses in the quarter, they mentioned.

Analysts count on

and Reliance Jio to offset any potential slowdown in subscriber additions by garnering greater information income and increasing their dwelling broadband user base as individuals as soon as once more return to largely working from dwelling.

“Rising Covid cases and selective lockdowns/restrictions on movement would impact net adds as well as consumer sentiment, and we see the risks of potential tariff hike further pushed back,” BofA Securities mentioned in a be aware seen by ET. It added that “Vi would be the most vulnerable,” given its weaker stability sheet.

Nitin Soni, senior director at international rankings firm Fitch, backed the view. “A potential slowdown in user adds in the June quarter amid fresh lockdowns could delay tariff hikes by around three to six months, which would further hurt Vi’s precarious financials, widen its losses and lead to more customer losses,” Soni mentioned.

Loss-making Vi wants to extend charges quickly to spice up confidence ranges of potential traders amid efforts to line up a sizeable funding. It additionally must garner assets to fulfill cost obligations, together with annual instalments in the direction of its adjusted gross income dues of over ₹50,400 crore and to beef up its 4G community to bridge the hole with Jio and Airtel, and in flip, retain subscribers.

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