Telcos Might Resort to Another Price Hike After Initiation of Costly 5G Services

It hasn’t been long since the telecom industry in India witnessed an overall tariff hike. Indian mobile service operators resorted to 20%-25% tariff hikes for all the prepaid plans offered by them. Now it is expected that telcos might opt for another price hike in the foreseeable future with the introduction of 5G services in the country which is the world’s second-largest market. As per ET Telecom, even though the initiation of 5G services will ensure the generation of additional revenue for the telcos particularly from the enterprise and digital services segment, it is going to come at a high cost. The major cost is going to be the amount companies will pay for the airwaves at the 5G auction.

The Current Scenario

On the other hand, the overall debt of the telecom industry remains stagnant as it has been stated by ICRA that debt levels will remain the same at around Rs 4.7 lakh crore as of March 31, 2022, and will be moderated to Rs 4.5 lakh on March 31, 2023. To make 5G available across India, the telcos have already been asking for the affordable pricing of the spectrum. Senior Director, Corporates at Finch Ratings, Nitish Soni has said in a statement that the recent price hike has been positive for the industry. He added that after having clarity on the spectrum next year, it is expected that the telcos will opt for another price hike.

The cost pressure mentioned above paired up with more headroom in the market is going to put the telcos in a position where they will resort to another price hike. However, the price hike is expected to happen by the end of 2022.

The three private telcos in the country Reliance Jio, Bharti Airtel and Vodafone Idea have already started conducting 5G trials in the country. It is also expected that the Telecom Regulatory Authority of India (TRAI) will also make steady recommendations on the process of auction of the spectrum allowing DoT to begin the auction of the 5G spectrum. The telcos have already begun the 5G trials in the cities across India including Bangalore, Gurugram, Kolkata, Chennai, Hyderabad, Mumbai, Delhi Jamnagar, Ahmedabad, Pune and more. It is expected that the metro cities of the country will be the first to witness the launch of 5G services in India.


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