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<\/span><\/figcaption><\/figure>NEW DELHI: Indian telecom operators may have to price 5G tariffs<\/a> similar to 4G tariffs in the absence of substantial use cases to boost the adoption of the fast wireless fifth-generation networks in the country, brokerage firm Jefferies<\/a> said on Tuesday, drawing parallels to South Korea and China where attractive pricing has helped drive 5G<\/a> penetration to 33-55%, respectively.

“While Chinese telcos 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\/VAS services to drive 5G uptake,” Jefferies said in a report on Tuesday.

The brokerage though cautioned that despite an increased 5G adoption on the back of attractive pricing, none of the two markets – China and South Korea – have seen a notable uptick in the average revenue per user (ARPU) despite higher data usage.

“Also, while Arpus for 5G users are higher, this is largely due to higher-Arpu subscribers adopting 5G rather than existing 4G users paying more for 5G. Given the global experience, Arpus in India are unlikely to rise just due to 5G, but will need an all-round tariff hike across 4G & 5G,” the brokerage said.

The industry<\/a> has been reiterating that the ARPU – a key performance metric – has been too low to be sustainable for telecom companies, and with 5G rollouts impending, a healthy ARPU will be even more crucial.

India’s second-largest telco Airtel currently leads with the highest ARPU of Rs 183, followed by Jio (Rs 176), and Vodafone Idea<\/a> (Rs 128), reported as of Q1FY23.

The telcos undertook a 20%-25% hike in their prepaid tariffs in November 2021 in a bid to boost their ARPU.

Jio is splurging Rs 2 lakh crore into building its 5G network with an initial launch in key cities within 1-2 months, leading to a pan-India rollout by December 2023. Airtel has also indicated a similar timeline for the initial launch, targeting pan-India 5G coverage by March 2024, while Vodafone Idea is yet to raise fresh loans for procuring 5G gear.

The aggressive rollout plans may also result in telcos’ Capex spends to rise significantly, Jefferies said. Besides spectrum, Capex spending will be primarily directed at fiberization which is still low at 34% for the industry and below 50% even in major cities like Delhi, it added.

“We thus expect capex spends to remain elevated over FY23\/24E, and we estimate 35-46% capex\/sales for Jio and 21-26% capex\/sales for Bharti. Higher capex with limited near-term ARPU upside, would need tariff hikes to sustain return ratios,” the brokerage said.

5G will also drive the next phase of shifts in market shares for Jio and Airtel, as traditionally, telcos with stronger balance sheets have had an edge over rivals.

\"Main<\/a><\/figure>

Main 5G monetization via tariff hikes: Airtel CEO<\/a><\/h2>

“Gopal (Vittal) reiterated that industry price repair is unfinished and needed for 5G monetisation and ROCE (return on capital employed) recovery, and he is not concerned about consumer acceptance of another price increase in a rising inflation environment, given that telecom is an essential service,” JP Morgan said in a note.<\/p><\/div>

\"\"
<\/span><\/figcaption><\/figure>NEW DELHI: Indian telecom operators may have to price 5G tariffs<\/a> similar to 4G tariffs in the absence of substantial use cases to boost the adoption of the fast wireless fifth-generation networks in the country, brokerage firm Jefferies<\/a> said on Tuesday, drawing parallels to South Korea and China where attractive pricing has helped drive 5G<\/a> penetration to 33-55%, respectively.

“While Chinese telcos 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\/VAS services to drive 5G uptake,” Jefferies said in a report on Tuesday.

The brokerage though cautioned that despite an increased 5G adoption on the back of attractive pricing, none of the two markets – China and South Korea – have seen a notable uptick in the average revenue per user (ARPU) despite higher data usage.

“Also, while Arpus for 5G users are higher, this is largely due to higher-Arpu subscribers adopting 5G rather than existing 4G users paying more for 5G. Given the global experience, Arpus in India are unlikely to rise just due to 5G, but will need an all-round tariff hike across 4G & 5G,” the brokerage said.

The industry<\/a> has been reiterating that the ARPU – a key performance metric – has been too low to be sustainable for telecom companies, and with 5G rollouts impending, a healthy ARPU will be even more crucial.

India’s second-largest telco Airtel currently leads with the highest ARPU of Rs 183, followed by Jio (Rs 176), and Vodafone Idea<\/a> (Rs 128), reported as of Q1FY23.

The telcos undertook a 20%-25% hike in their prepaid tariffs in November 2021 in a bid to boost their ARPU.

Jio is splurging Rs 2 lakh crore into building its 5G network with an initial launch in key cities within 1-2 months, leading to a pan-India rollout by December 2023. Airtel has also indicated a similar timeline for the initial launch, targeting pan-India 5G coverage by March 2024, while Vodafone Idea is yet to raise fresh loans for procuring 5G gear.

The aggressive rollout plans may also result in telcos’ Capex spends to rise significantly, Jefferies said. Besides spectrum, Capex spending will be primarily directed at fiberization which is still low at 34% for the industry and below 50% even in major cities like Delhi, it added.

“We thus expect capex spends to remain elevated over FY23\/24E, and we estimate 35-46% capex\/sales for Jio and 21-26% capex\/sales for Bharti. Higher capex with limited near-term ARPU upside, would need tariff hikes to sustain return ratios,” the brokerage said.

5G will also drive the next phase of shifts in market shares for Jio and Airtel, as traditionally, telcos with stronger balance sheets have had an edge over rivals.

\"Main<\/a><\/figure>

Main 5G monetization via tariff hikes: Airtel CEO<\/a><\/h2>

“Gopal (Vittal) reiterated that industry price repair is unfinished and needed for 5G monetisation and ROCE (return on capital employed) recovery, and he is not concerned about consumer acceptance of another price increase in a rising inflation environment, given that telecom is an essential service,” JP Morgan said in a note.<\/p><\/div>