Indian telcos all set to hike tariffs to fund 5G ecosystem

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By Sanjay Singh

New Delhi, November 7: India’s mobile users may witness frequent tariff hikes next year and beyond, as telecom companies look at increasing their average revenue per user (ARPU) to fund and develop 5G ecosystem.

The 5G services required high capital expenditure. With almost all major telcos eyeing to launch 5G soon, the requirement for funds is high. At the same time, Reliance Jio may lead in tariff hikes as it plans to launch an initial public offer (IPO). Bharti Airtel recently informed that it has crossed one million in the 5G user base. It is also aiming for a full-fledged launch of 5G in the coming months, raising the need for money for at least the next 12-18 months.

According to a report by Nuvama Institutional Equities Airtel has been following an optimal 5G strategy by betting on the non-standalone (NSA) 5G version, which is prudent considering 5G NSA can be rolled out much faster and investment is lower as it can leverage existing 4G infrastructure for the coverage layer.

“Besides, currently very few use cases require network splicing and sub-millisecond latency offered by standalone (SA) 5G,” it added. Similarly, for Vodafone-Idea (Vi), tariff revision has become critical to their existence. Developing 5G ecosystem has become important for both telecom companies in India and the government as well.

The government wants to leverage the 5G space to adopt this new digital technology for social and economic development and bring the technology at the global level. It also sees 5G as a key to digitalisation of the economy and improving lives of Indians. Giving big push to develop the 5G ecosystem in India is aimed to boost Digital India initiative, and the Centre has approved ₹26,000 crore to install new 25,000 mobile telecom towers in the next 500 days to utilise the Universal Service Obligation Fund (USOF).

The mobile internet penetration is expected to increase from 48.9 per cent in 2021 to 78.1 per cent in 2027 on remote or hybrid work, and high demand for online entertainment, online learning, and digital payment services. Mobile internet boost in rural and remote areas will also drive internet penetration. The much-awaited rollout came after 5G spectrum auctions, in which 51,236 MHz spectrum was allocated to telcos, generating up to ₹1,50,173 crore for the government. The Centre expects the total economic impact of 5G on India at $450 billion by 2035.

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