Anticipated increase in mobile tariffs for 5G users

Mobile telecom services users who have enjoyed unlimited data on 5G services at no extra cost, can expect to fork out more as tariffs are set to head north soon, with Reliance Jio expected to raise rates as it seeks to monetise 5G services.

Tariffs were stable last year, with the leading telecom companies Bharti Airtel and Reliance Jio focused on their 5G roll-out targets. However, this is likely to change with RJio reporting flat ARPUs (average revenue per user) sequentially at Rs 182 in the December quarter.

Reliance Jio currently offers unlimited data at no extra cost to 5G users, who get a large amount of data without having to buy additional data or higher usage plans. This has limited the growth of ARPUs, a fact that was pointed out by the management at the Q3 results briefing. If ARPUs have to rise, RJio has to introduce dedicated data plans for 5G users, and this would mean an increase in tariffs, which may happen sooner than expected.

“We believe the focus will now shift toward monetisation, with a tariff hike likely in the next few months,” said Kotak Institutional Equities.

The company said it has completed the roll-out of 5G services. JioAirfiber and its offerings for the enterprise segments have seen traction, which makes a case for tariffs to be raised.

The exact quantum of hike will depend on the traction for 5G and the number of users.

RJio added 11 million subscribers in the third quarter and data usage at 27.3 GB per SIM per month rose 2.4 per cent sequentially. Its revenue per GB fell 2.3 per cent sequentially, and 16 per cent on year to Rs 6.7

After hikes in 2019 and 2021, rates in the telecom sector have been stable for the most part as operators have been concentrating on expanding their subscriber base. The 5G launch was supposed to be a huge game changer in terms of internet speeds and its use in a number of segments. However, 5G uptake has been poor, BNP Paribas Securities said.

Operators have rolled out 5G services at existing plans and it is time that monetisation starts with separate data plans, which may come bundled with other content. The Hindu BusinessLine