Jio, Airtel 5G Tariff Hike is Expected Says Jefferies

Reported by Tanuja K January 15th, 2024 at 01:01 pm

One key thing to draw attention towards here is that even though the 5G adoption may increase, many customers may not want to spend extra for 5G simply because they might get decent enough speeds with 4G. The telcos know that the use case of 5G for consumers is limited to mobile usage.

Highlights

Reliance Jio and Bharti Airtel, the two leading telecom operators, will look to charge at least 5-10% more for 5G, said Jefferies.
The analyst also suggested that the telcos will end their current unlimited 5G data offer.
Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said that Jio completed the fastest 5G rollout in Dec 2023.

jio airtel 5g tariff hike is expected

Reliance Jio and Bharti Airtel, the two leading telecom operators, will look to charge at least 5-10% more for 5G, said Jefferies in a report seen by ET. The analyst also suggested that the telcos will end their current unlimited 5G data offer. While it is supposed to end someday, we believe that the offer may not go away so soon. According to the analyst, the removal of the 5G offer may come in the second half of 2024. The telcos would have covered much of India with 5G by then given the speed at which they are rolling out 5G. Note that it is not the telcos saying this, but the analyst, so nothing's set in stone here.

One key thing to draw attention towards here is that even though the 5G adoption may increase, many customers may not want to spend extra for 5G simply because they might get decent enough speeds with 4G. The telcos know that the use case of 5G for consumers is limited to mobile usage. Not many people would generally care about 5G if they are working in offices or from their homes, as to connect several devices, these buildings (commercial and residential) have optical fiber broadband connections.

We have said before that the telcos may instead slow down their 5G investments and focus more on increasing ARPU (average revenue per user) by driving up the price of 4G plans. 5G could still be offered as a free service on the 4G plans priced at a higher point. Otherwise, the only way that telcos can directly monetise 5G with the consumers is through their FWA (fixed wireless access) service. Analysts already expect the telcos to drive down the 5G capex FY25 onwards.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said that Jio completed the fastest 5G rollout in Dec 2023. However, there are still many areas that remain to be covered with 5G. Also, the availability of low-cost 5G phones is a must in the offline retail market to drive the adoption of 5G in India. Overall, it may not be the best move for the telcos to remove the unlimited 5G in 2024 and introduce higher-priced 5G tariffs. Instead, the focus should be on driving the ARPU up by increasing 4G tariffs.