OREANDA-NEWS. Fitch Ratings expects strong data growth and non-traditional revenue sources such as network applications and services to drive revenue growth for Australian telecoms operators in 2016, according to the agency's report published today.

Data consumption across both fixed-line and wireless will continue to grow, reflecting increasing data penetration and the growing importance of video in driving the migration of customers to higher-consumption plans. Fitch also expects double-digit growth in non-traditional revenue streams, including their rising contribution to revenue.

Australian telcos continue to face adverse trends in average revenue per user (ARPU) and fixed-voice revenue. Fitch expects 2016 revenue and EBITDA growth to remain in the low single digits. This reflects declining fixed-voice revenues from fixed-to-mobile substitution, although strong data consumption growth across fixed-line and mobile will mitigate declining fixed-voice revenues. Increased take-up of bundled services will boost margins in the fixed-internet segment. Intensifying competition in the mobile segment will result in lower ARPU, although this will be somewhat mitigated by data-centric pricing to capture the higher data usage.

Fitch's outlook on Australia's leading telcos is stable. We do not expect downward pressure on rating guidelines, although financial profiles may weaken from high-debt-funded capex. Ratings upgrades are not envisaged in the medium term. The challenges across the sector from changing technology and regulation, competition and ongoing capex needs, will prevent any major sustained improvement in business or financial risk.