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He added that while Airtel’s 5G services – starting next month – would be competitive with peers on quality and timelines, the telco would have preferred to defer its 5G rollouts by at least a year as penetration of compatible handsets remains low and monetisation of consumer and enterprise use cases will take time to evolve.
“Gopal (Vittal) reiterated that industry<\/a> 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.
BNP Paribas too sees a high likelihood of Airtel taking a tariff hike in FY23 itself, especially after the telco’s sizable investment in 5G airwaves coupled with the fact that its current ARPU – at Rs 183 – is below its near-term target of Rs 200.
Airtel shares closed 2.04% lower to Rs 755.20 on BSE Monday.
Sunil Mittal-led Airtel, which bought 5G airwaves worth Rs 43,084 crore in the recently concluded auction, plans to offer 5G data speeds up to 30 times faster than 4G and expects to cover all of urban India by end-2023. Some experts say the telco could have an early edge vs Jio as the version of its 5G rollout using the non-standalone (NSA) model is more evolved as over 90% of global 5G traffic runs on such networks.
In this context, Vittal said a standalone (SA) 5G network running on 700 MHz spectrum – which Reliance Jio<\/a> is deploying -- can be faster but not by much. “Gopal highlighted that 5G SA on 700 MHz can be faster on empty networks than the mid-band spectrum (that Airtel will use for its 5G services) by 5-10 Mbps at best,” JP Morgan said.