Telecom sector revenue to grow by 5-7% this year: Fitch

Fitch Ratings expect Sri Lankan telecom industry’s revenue to rise by 5-7 percent this year, driven by a surge in data and fixed broadband, largely due to COVID-19 effects.

“We expect 2021 industry revenue to rise by 5%-7%, driven by a surge in data and fixed broadband, following lower growth of 2%-3% in 2020,” Fitch Ratings said.

“Mobile data service revenue is likely to expand by 15%-20% (2020F: 25%-30%) on higher smartphone penetration and rising data consumption,” it added.

The rating agency also foresees more industry consolidation going forward.

“We expect further sector consolidation, and believe Airtel Lanka, a subsidiary of Bharti Airtel Limited (BBB-/Negative), may seek M&A due to mobile competition and higher taxes amid capex needs.

Airtel Lanka acquired the 900MHz spectrum that was surrendered when Etisalat Lanka and Hutch Lanka merged in 2018. We expect the telcos to focus on profitability, and price-based competition not to intensify,” Fitch noted.

Sri Lanka currently has four mobile telephony services providers.