5G Smartphones Rising Cost Could be a Hit to Jio, Airtel and Vi Plans

The question is not about the amount of money that the telcos are investing in the 5G spectrum auctions in 2022; it is about the ROI (Return on investment) that they will see. As per industry experts, the chipset costs are not going to come down anytime soon. Even before the pandemic, there was a slight shortage of semiconductors. It worsened as the manufacturing facilities were closed due to the pandemic. 

Highlights

  • The telecom operators in India are currently bidding for the 5G spectrum.
  • One thing that could hurt the way telcos are expecting to monetise 5G is the rising cost of smartphones.
  • By the end of day 3 of the spectrum auction, the bidders had spent close to Rs 1.5 lakh crore for purchasing airwaves.

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The telecom operators in India are currently bidding for the 5G spectrum. With the 5G spectrum auctions now expected to be over soon, telcos will look to use the purchased spectrum as fast as possible to make returns. Consumer services with 5G networks might not be that big of a push by the telcos initially, but enterprise services will definitely be a focus area. One thing that could hurt the way telcos are expecting to monetise 5G is the rising cost of smartphones. Due to the rising cost of components such as chipsets and displays, the end price of smartphones is getting high. While this will be the first time that the telecom operators will get a ready market with several million users already owning 5G smartphones before even the networks were launched, what's worth questioning is whether the telcos will be able to make their money back.

Can Telcos Make Money Back with 5G Soon?

The question is not about the amount of money that the telcos are investing in the 5G spectrum auctions in 2022; it is about the ROI (Return on investment) that they will see. As per industry experts, the chipset costs are not going to come down anytime soon. Even before the pandemic, there was a slight shortage of semiconductors. It worsened as the manufacturing facilities were closed due to the pandemic.

By the end of day 3 of the spectrum auction, the bidders had spent close to Rs 1.5 lakh crore for purchasing airwaves. These are big investments, and the telcos will definitely look to recover the cost in one way or the other. Jio has bid for the most spectrum, and the telco might also launch 5G services aggressively the way it did with 4G.

It will be worth watching how the move in the 5G spectrum auction for the telcos pans out. The cost of the 5G smartphones is not going to come down. That could delay the monetising plans of Airtel, Jio and Vi (Vodafone Idea), the three private telecom operators in India. The launch of 5G networks is expected to happen in the coming few months within 2022 itself.

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