Telcos predicted to double profits in next two years

Telcos predicted to double profits in next two yearsRating agency Crisil said less competition and a rise in usage of data and value-added services will help large telecom companies post a 20 percent increase in operating profit over the next two years.

It said in a press release, this is double the operating profit growth they have witnessed over the last five years.

In the Indian telecom market competition had eased of late as companies started to increase fares a few months back.

The rating agency also sees tailwinds on the regulatory front as policy clarity is emerging.

it said, the crucial issues of spectrum availability and pricing have been partially addressed with the finalisation of the reserve price for the next round of auction in January 2014. However, much depends on how fast the rest of the regulatory issues are resolved.

Crisil expects the companies to continue the pricing power for the next two to three years. For large telecoms, average realised rate per minute (ARPM) stabilised in 2012-13, while it improved by around 5 percent in the first half of the current fiscal as tariffs were hiked in select circles.

"Our estimates show there is still a 50 percent gap between headline tariffs and ARPM due to discounted call rates offered to many subscribers, it added.