In Short:
India’s 5G subscriber base is expected to increase, but adoption will be slower due to higher smartphone prices. Telecom industry to peak at $20 billion investment in 5G by 2024. Airtel and Jio rolling out 5G, focusing on improving return on investment. Uncertainty on tariff hikes. Jio and Airtel gaining market share from Vodafone Idea. Weathering spectrum renewal costs and potential tariff increases.
India’s 5G Subscriber Base Expected to Reach 20-25%: India Ratings and Research
India Rating and Research (Ind-Ra) has projected that India’s 5G subscriber base will increase to 20-25% of overall users from the current 17%. However, the adoption of 5G is anticipated to be slower than that of 4G due to the higher average selling price of 5G smartphones, which is 2-4 times the price of regular smartphones.
Industry Outlook
Ind-Ra noted that the Indian telecom industry is at a crucial juncture in fiscal 2024, with investments in 5G networks and spectrum renewal peaking at nearly $20 billion. Following this peak, telecom companies are expected to rein in their investments, while the possibility of tariff hikes remains uncertain.
“The cash outflow towards spectrum renewal/acquisition may have a slight impact on cash flows from FY25 onwards. The potential for significant tariff hikes remains uncertain, as globally, 5G has not commanded a substantial premium over 4G tariffs,” said Priyanka Bansal, associate director at Ind-Ra.
Key Players
Bharti Airtel and Reliance Jio, the only two telcos offering 5G services, have indicated that capital expenditure intensity is expected to ease from FY25 onwards, following a rapid nationwide rollout of 5G by CY2023 with 95% coverage.
“Telcos are now focusing on enhancing return on capital investment by increasing operational efficiencies,” added Bansal.
“The improved service offerings, including higher data speed and quantity, along with other auxiliary services and 5G capabilities, have put telcos in a stronger position to implement tariff hikes compared to previous cycles,” she further stated.
Future Prospects
Ind-Ra highlighted that substantial investments in network infrastructure have enhanced service quality and offerings, leading to increased data usage and user satisfaction. The top two telecom operators, Jio and Airtel, are expected to continue gaining market share, particularly in the high-ARPU customer segment, at the expense of Vodafone Idea.
