As telcos gear up for 5G launch, sector shows progress | The Financial Express

As telcos gear up for 5G launch, sector shows progress

Brokerage firm CLSA predicts 5G smartphones are estimated to reach 250 million by FY25. Currently, there are 50 million 5G handsets. As per Trai data, average usage of 4G subscribers at 15GB monthly is up 5x in five years.

As telcos gear up for 5G launch, sector shows progress
Jio and Bharti now make up 76% of the market. However, Arpu is still lower than pre-September 2016 — before the lauch of Jio — and, adjusted for inflation, is 25% lower.

As the country’s top two telecom operators, Reliance Jio and Bharti Airtel, prepare to launch 5G services in the latter part of the next month, the sector’s key parameters have started to look up. Analysts are of the view that the timing is right for the two companies to shift gear to the 5G play.

As per Telecom Regulatory Authority of India (Trai) data, the sector’s average revenue per user (Arpu) has risen 53% since FY19 and 4G subscribers have tripled in the past five years to 761 million, while data traffic has increased 18X. Jio and Bharti now make up 76% of the market. However, Arpu is still lower than pre-September 2016 — before the lauch of Jio — and, adjusted for inflation, is 25% lower.

Brokerage firm CLSA predicts 5G smartphones are estimated to reach 250 million by FY25. Currently, there are 50 million 5G handsets. As per Trai data, average usage of 4G subscribers at 15GB monthly is up 5x in five years.

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While the scenario looks bright on 4G and wireless sides, the same is not true on the wireline broadband front. If with 761 million 4G subscribers, the country’s mobile broadband penetration is 68% of the total 1,142 million mobile phone subscribers, wireline broadband penetration is among the lowest worldwide, with only 27 million of 300 million households having a wireline broadband connection. This is largely because India went the wireless way, even for voice calls, two decades ago. This resulted in inadequate wireline infrastructure across the country. However, analysts concur that the wireline broadband will also get a boost as 5G services deepen.

As reported earlier, Jio and Bharti Airtel are not looking at higher tariffs for 5G services during the initial period of the launch in metro cities by Diwali. Low penetration of 5G-enabled handsets and some technical limitations arising out of the inability of a bulk of these handsets in supporting certain spectrum bands are the key reasons cited by company executives for such a move.

Instead of coming out with new 5G packs priced higher than the current 4G packs, the two players are likely to upgrade users of certain tariff plans to 5G. This can be done easily as no change of SIM card is required to upgrade subscribers from 4G to 5G, as was the case in the migration from 3G to 4G. Further, since the service providers would be able to make out from their networks which subscribers are on 5G-enabled phones, direct messages can be sent to them regarding their upgrade at no extra cost.

Company executives said since data usage of 5G users would rise substantially, it would translate into higher Arpu for the operators without any tariff hike.

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