5G plan prices in India to be higher than 4G rates initially, say analysts

Telecom companies are expected to charge a premium for 5G plans in India compared to current 4G rates. Here's why.

Highlights
  • 5G plans to be more expensive than 4G at first, says industry experts.
  • 10-12 percent more could be charged to the first flock of 5G customers.
  • 5G rates, however, might eventually coincide with 4G as the technology matures and adoption grows.

Telecom companies like Airtel and Jio might charge users more for 5G data plans initially, as per analysts. The new generation of the cellular network is going to be more expensive in the beginning as compared to 4G rates in the country. These higher prices, as industry experts and top brokerage firms, could be used to trigger an uptick in the next wave of average revenue per user (ARPU) growth. 

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Telecom companies are lining up to participate in the upcoming 5G spectrum auction. 5G, as promised by the government, is set to roll out this year itself, and Indian telecom users could see Adani group set out to tackle Jio, Airtel, and Vi in their own game. 

5G prices to be higher than 4G at first

The 5G rollout that is on track has got the industry experts talking, and this time reports suggest the kind of tariff plans one can expect. Industry thoroughbreds suggest that initial offering prices on 5G are likely to be higher than 4G rates in the country. This is a clear departure from what happened in the transition from 3G to 4G, as one can recall.

Experts indicate a 10 to 12 percent premium in 5G rates initially as compared to 4G. The higher rates, in the beginning, can be credited to triggering a new wave of growth in average revenue per user (ARPU). One analyst stated that the 10 times higher speeds of 5G as compared to 4G could be used to target mid-range and premium smartphone users who would be ready to pay the premium. 

An established Japanese brokerage firm said, “5G tariff plans would be a key monitorable in the near term and a 5G premium (versus 4G) may provide the next leg of ARPU uptick for the telcos”. A top executive from the Big 3 Telcos told The Economic Times that a niche offering in the case of 5G that can’t be offered with 4G could be used to extract a premium at first. Companies would also use the flow of higher revenue to compensate for the hardware upgradation that was necessary to implement the next-generation telecommunication service.

However, most say that 5G prices in India eventually would coincide with 4G rates to help in the adoption of the new technology as it matures further.