Airtel and Reliance Jio, two of India’s leading telecom giants, are gearing up for a major transformation in the telecom sector as they reportedly plan to introduce 5G tariffs. This strategic shift from offering 5G services at 4G prices signifies the end of free 5G access and the onset of a new era in pricing strategies.
Transition to 5G Tariffs: After providing customers with complimentary 5G services for over a year, Jio and Airtel are now considering the monetization of their 5G offerings. Analysts project that by the second half of 2024, these telecom giants will roll out 5G tariffs, potentially charging 5-10% more for 5G services compared to existing 4G plans. This move aims to drive market share gains and offset the substantial costs associated with deploying 5G technology.
Expected Changes in Tariff Structure:
- Incremental Pricing: Airtel and Reliance Jio are expected to raise their 5G tariffs by 5-10% over existing 4G rates.
- Introduction of 5G-specific Plans: As the 5G network nears completion, the telcos may unveil dedicated 5G plans, potentially offering 30-40% more data compared to 4G plans.
- General Tariff Hikes: In addition to introducing 5G-specific tariffs, there may be a general increase in mobile tariffs by about 20% in late 2024 to improve RoCE (Return on Capital Employed) amid heavy 5G investment.
Industry Impact:
- Subscriber Dynamics: Currently, Jio and Airtel boast a substantial 5G subscriber base, expected to grow significantly by the end of 2024.
- Operational Costs: The operational expenditure per subscriber for these telecom operators is on the rise, primarily due to the nationwide rollout of 5G.
- Global Comparison: Despite the anticipated hike, India’s telecom tariffs remain among the lowest worldwide, suggesting ample room for growth.
Airtel’s Position on 5G Tariffs: Airtel’s Managing Director, Gopal Vittal, in a recent earnings call, expressed hesitation about immediate 5G tariff increases. However, he indicated that Airtel is open to leading a general tariff hike to enhance ARPU (Average Revenue Per User) levels.
Sectoral Forecast:
- Revenue Growth: With the introduction of 5G tariffs and increased data consumption, the mobile sector’s revenue is expected to rise significantly.
- Competitive Edge: The tariff changes and 5G deployment will likely intensify competition, especially impacting Vodafone Idea, which is yet to launch its 5G services.
In summary, the introduction of 5G tariffs by Airtel and Reliance Jio marks a pivotal shift in India’s telecom sector. As these companies transition from offering free 5G services to implementing specific tariffs, the landscape of mobile telecommunications in India is set for a significant transformation, both in terms of revenue and consumer experience.
