Growth is back, with 32 out of the 36 telcos displaying positive year-on-year revenue growth in this research. Dialog Axiata emerged with an exceptional annual growth rate of 31 percent (Exhibit 1). Meanwhile, tariff adjustments have been the key driver for the continued revenue growth in India’s telecom sector, especially for Bharti Airtel and Reliance Jio.
They recorded revenue growth of 14 percent and 12 percent, respectively. The leading telcos are eyeing another round of adjustments as investments in 5G will likely place increased pressure on profitability in the coming years.
Exhibit 1: Percent revenue change of APAC telcos in Q1 2023
Telcos across the region reported a decline in average EBITDA margin from 33.8 percent to 29.5 percent in Q1 2023. According to the Twimbit benchmark, Grameenphone recorded the highest EBITDA margin of 61.1 percent.
In contrast, Dialog Axiata’s revenue growth has not been enough to offset the impact on profitability, with the telco witnessing its lowest EBITDA margin. It decreased from 38.4 percent in Q1 2022 to 15.6 percent in Q1 2023.
“The higher direct and network costs from double-digit inflation have played a significant role impacting its EBITDA,” – Siddhant Ranjan (Research Analyst, Twimbit)
Asia Pacific (APAC) telcos aggregate a substantial 17.3 percent of total revenues as CAPEX in Q1 2023. This quarter also marks a shift with mature markets, such as China, Japan and South Korea, who have all registered a decrease in overall CAPEX due to peak 5G penetration.
“Only China Telecom has continued to increase CAPEX investments, with aspirations to be the region’s market leader in 5G. Its new focus has led to the development of use cases for industrial digitalization,” said Siddhant Ranjan. The telco recently recorded a CAPEX of USD 4.55 billion in Q1 2023, an annual growth of 56 percent.
“The Indian government continues to emphasize 5G deployment, aiming for widespread availability nationwide by December 2023.” Bharti Airtel increased its CAPEX by 110 percent totaling USD 1.08 billion in Q1 2023 (Exhibit 2).
Exhibit 2: CAPEX performance of APAC telcos in Q1 2023
“Q1 2023 marks a notable shift, with 5G being the primary focal point for the telcos’ investments in India,” expressed Siddhant Ranjan, Research Analyst at Twimbit. “As the telecommunications industry continues to evolve, the push for 5G has become more apparent both on a commercial and enterprise level.”
Twimbit clients can read more in “Unveiling the best: Benchmarking APAC telcos in Q1 2023”.
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