The outlook for Asia’s mobile operators next year is bright as reduced capex will help drive increased earnings for many companies across the region.
Moody’s has forecast average aggregate revenue growth of 4-5 per cent over the next 12-18 months, which is similar to the growth rate this year. Although it expects EBITDA to continue to increase, companies’ average EBITDA margin will contract slightly.
Growth rates will vary by the maturity of the market, with developed markets, such as Singapore, Japan and South Korea, growing 1-2 per cent and emerging markets like China, Thailand and Indonesia growing 5-8 per cent.
Moody’s said the aggregate absolute EBITDA is expected to increase about 2 per cent year-on-year.
High mobile phone penetration, rising competition and increased revenue contribution from data services will continue to pressure margins, but they will remain healthy, said Nidhi Dhruv, an assistant VP at Moody’s.
The average EBITDA margin for operators is expected to be 38 per cent next year, down slightly from 38.2 per cent this year.
As many operators complete their 3G or 4G rollouts, average capital spending as a percentage of revenue will decline to around 23 per cent next year.
Debt-to-EBITDA ratios will also decline, driven mainly by EBITDA increases, said Moody’s.
The rating agency noted that operators still benefit from easy access to bank funding and capital markets. Steady recurring cash flows continue to support industry liquidity and resilience even during economic downturns, it said.