India Telecommunications Q1 2021
There has been a noticeable transition toward focusing on higher-value subscriptions, and a clear focus on operatorsleveraging OTT content in order to help maintain subscriber stickiness and reduce churn. This dynamic has been reflected inimproving profitability in the fiscal year, with ARPUs also stabilising, although this could partly be due to the deactivation of inactiveprepaid SIMs, given that more people are sheltering-in-place amidst the pandemic. We observe that 3G continues its rapid declineas subscribers latch on to LTE services, enabled through the proliferation of low-cost smartphones and feature-phones. We view thatthe next phase of organic growth for operators will be in rural and underserved regions, which has unsurprisingly been the target ofoperator investments. Operators, however, will continue to contend with burdensome taxation and regulator pressures; theAdjusted Gross Revenues-related licence dues, which amounted to an additional INR920bn (USD12.8bn), will remain the biggestshort-term financial risk to operators.
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