Jio effect? Telecom industry is at its weakest

June 11, 2017

The Indian Telecom sector has been under pressure for the last 8 years because of rising competitive and capex intensity. During this period the contribution of telecom services to GDP has declined from 2% of GDP in FY09 to just 1.2% in FY17.
The return ratios for the telecom players has also consistently declined during the period and all the telecom companies do not manage to earn their cost of capital because of continuous investments in spectrum purchases. While competitive intensity has changed with entry and exit of players, the capex intensity has consistently risen because of spectrum auctions. Source

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