According to a report by Jefferies, the Indian telecom operators may have to price 5G tariffs similar to 4G tariffs in the absence of substantial use cases to boost the adoption of the fast wireless 5G generation networks in the country. Alluding to the adoption trends in China and South Korea, the report notes that while telcos in China focused on a lower price/GB metric with similar price points to promote adoption, South Korean telcos offered high data allowance/unlimited plans and bundled it with content/value added services to drive 5G uptake.
Meanwhile, taking into account the global scenario, the report mentions that the average revenue per user (ARPU) in India are unlikely to rise just due to 5G. To this end, the report suggests that the country will need an all-round tariff hike across 4G and 5G.
However, the report forecasts that an aggressive rollout plans may also result in telcos’ capital expenditure (capex) spends to rise significantly. The report by Jefferies believes that besides spectrum, capex spending will be primarily directed at fiberisation which is still low at 34 per cent for the industry and below 50 per cent even in major cities like Delhi.
Drawing inference, the report expects the capex spends to remain elevated over FY’2023/2024, and estimates 35-46 per cent capex/sales for Reliance Jio and 21-26 per cent capex/sales for Bharti Airtel. Lastly, the report expects 5G smartphones to form 90 per cent of overall smartphone shipments and over 50 per cent of total smartphone devices by end of calendar year (CY) 2023.
