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5G Is Here: When will you, the customer, get it and how long can Vodafone Idea users wait

5G Is Here: When will you, the customer, get it and how long can Vodafone Idea users wait

5G Is Here: When will you, the customer, get it and how long can Vodafone Idea users wait
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By CNBCTV18.com Oct 1, 2022 2:29:39 PM IST (Updated)

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SUMMARY

Prime Minister Narendra Modi officially launched 5G mobile services on Saturday, October 1, at the India Mobile Congress 2022, where industry titans Mukesh Ambani, Sunil Bharti Mittal, and Kumar Mangalam Birla were also present. While Jio and Airtel have given launch timelines, Vodafone Idea has just said the launch will happen "soon".

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Prime Minister Narendra Modi launched 5G services on Saturday, October 1. Reliance Jio and Bharti Airtel are entering the market and have announced aggressive rollout plans. Vodafone Idea had not announced 5G intentions yet. But on Saturday, Kumar Mangalam Birla said it would offer 5G "soon".

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Reliance Jio Infocomm — the Reliance Group's telecommunications arm — plans to invest Rs 2 lakh crore for the rapid rollout of the 5G network across India. Customers in Delhi, Mumbai, Chennai, and Kolkata will be able to access super-fast internet by this Diwali.

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Reliance Industries Chairman Mukesh Ambani said in the last annual general meeting that the telecom company aims to achieve a pan-India presence by December 2023.

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Ambani added that he firmly believed that digital freedom is the birthright of every Indian. "Therefore, 5G cannot remain an exclusive service, available only to the privileged few or only to those in our largest cities," he said.

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Bharti Airtel also said in its June quarter earnings conference that the telco planned to cover the whole of India with its 5G coverage by 2024. Airtel also said that its SIM cards are 5G-enabled and would function flawlessly on 5G handsets.

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During a recent JPMorgan Conference, Bharti Airtel said the firm would have preferred to defer 5G rollouts by a year as India only has 9 percent of existing phones and 30 percent of phone shipments that support 5G. But also said it would be matching rival rollout timelines. In August, Sunil Bharti Mittal praised the quick allocation of the 5G spectrum.

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One of the reasons why Vodafone Idea had not unveiled any 5G plans could be the long-delayed conversion of deferred adjusted gross revenue (ACG) dues into government stake, which has been pending since January.

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The question is will the company be able to raise external funding, which will help it in its rollout plans? The risk of a delayed 5G rollout poses a threat to the firm, as consumers may migrate to competitors to take advantage of 5G's faster speed and reduced latency, experts say.

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Vodafone Idea has 119 million 4G internet customers and 20 million postpaid subscribers. The company risks losing some of these clients, which might lead to greater market losses that VI has been experiencing in recent months.

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Vodafone Idea's market share drop poses a significant risk to the company since the combined market share of its competitors, Reliance Jio and Bharti Airtel, is increasing. Experts say VI's decreased capital investment and inability to implement 5G on time might lead to another round of consolidation.

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The factors that would drive 5G in India are smartphone availability and affordability. Furthermore, the price of a 5G smartphone is cost prohibitive. According to IDC, the price of a 5G smartphone is $350, but an average phone sold in India costs $220. Experts say all eyes will be on the cost of the Reliance Jio 5G smartphone in this regard.

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The market will keep an eye on 5G tariffs. With the second round of 20% tariff increases in the past three years, industry pricing is on the rise. Also, a recent Ericsson report said only 100 million Indian users are keen on 5G and ready to shell out up to 45% premium.

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However, the average revenue per unit (ARPU) remains lower than it was before Jio's introduction in FY16. Can 5G's faster speed create a higher growth in ARPU? That is something we should keep an eye out for.

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