With an eye on premium users, top two telecom players Reliance Jio and Airtel have announced new 5G plans as they go all out to attract new 5G users and upgrades.
Reliance Jio, which created disruption in the telecom sector with its entry in 2016 with 4G services, announced 5G plans which are expected to be 30% cheaper than competitors. To counter this, Airtel announced unlimited 5G data offer for its postpaid and prepaid users with data plans of Rs 239 and above.
Both the telcos are wooing high ARPU (average revenue per user) subscribers – new 5G and upgrades from 4G to 5G and have stepped up the fight to gain maximum users. Jio and Airtel have been aggressively launching 5G mobile services across various cities in the country.
About 300 million subscribers are expected to use 5G services by FY25, as against an estimated 20-25 million subscribers as of FY23 while the mass adoption of the fifth-generation services will be driven by the availability of retail use cases.
The mobile users of Vodafone Idea, which is yet to launch 5G services, are the biggest bet of the other two telcos. While Jio is aiming to complete the network roll out by December 2023, Airtel has stated its roll out will be completed by March 2024.
Jio’s maximum users are in the prepaid segment and it needs to attract postpaid users to its fold to drive revenues. According to available information, for Jio, its postpaid user base is below 5% of its 430 million subscriber base. Around 6% of Airtel’s over 332 million subscribers use postpaid plans, while roughly 10% of Vi’s 228.6 million users are postpaid customers.
5G could accelerate adoption of over-the-top streaming services and online gaming, which would drive data demand further and increasing average data usage per subscriber per month is expected to rise to around 28-30 GB by fiscal 2025 from 20 GB at present.
The adoption of 5G services would be largely driven by technology-neutral tariffs being offered by telecom operators currently and the penetration of the 5G device ecosystem among users would also be crucial for the uptake of 5G services. About 30-35% of the 150-170 million smartphones shipped in India annually are 5G enabled.
The tariff wars in 4G services had led to a stupendous increase in data consumption making India one of the fastest growing mobile markets in the world. But the ARPU levels had gone down tremendously impacting the financial health of telcos. 5G and its monetisation through various ways may improve the metrics for telcos.
Analysts say Jio’s new entry level family postpaid plan is cheaper than the existing plans of rival operators but not necessarily disruptive and will drive market share gains for the telecom market leader only over time. But this may delay any industry wide tariff hikes which has been the need of the hour as telecom operators look towards profitability and higher ARPUs. While Airtel’s latest unlimited 5G data plan is aimed at retaining its postpaid users and upgrading its 4G users to 5G. Both the developments aimed at boosting ARPU, which is a key matrix for profitability.
Though the 5G services launch has gained momentum, an adoption hinges on a significant improvement in network infrastructure, which will happen only gradually over the next few years, according to a CRISIL report.