Asia-Pacific telcos expect steady revenue growth in 2021: Moody’s

Asia

KUALA LUMPUR: Telecommunication companies (telcos) in the Asia-Pacific (Apac) countries are expecting revenue growth of 3.5% to 4% as the sector gradually recovers from the Covid-19 pandemic-led decline in the first half of 2020, said Moody’s Investors Service.

Vice-president and senior analyst Nidhi Dhruv said telco operators in emerging markets will see revenue grow faster than in developed markets, due to relatively lower penetration rates.

“This revenue growth lags behind the average Gross Domestic Product growth of 5% for the 11 APAC countries with rated telcos in 2021, given the maturity of the sector.

“Given revenue increases, aggregate adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) will grow 2% to 3% in 2021 compared with just 0.1% growth in 2020.

“Ebitda margins will remain stable at around 37% as telcos cut costs and delay capital expenditure (capex) in a more difficult economic environment,“ she said in a statement today.

Nidhi said capex of telcos is expected to remain high at 22% of revenue on average in 2021, well above the United States and European telco’s ratio despite marginal decline.

“Free cash flow will remain negative but some reduction in shareholder returns will lead to gradual improvement.

“Meanwhile, the adoption of 5G (fifth generation) technology varies across the region, with South Korea leading the pack, followed by China, Japan and Australia,“ she added. – Bernama

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