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Will 5G connection increase your phone bill?

Will 5G connection increase your phone bill?

The spectrum auctions are over and speculations are rife that the new generation of telecom services in India would automatically lead to hikes in tariff.

How 5G will impact phone bills How 5G will impact phone bills

The 5G spectrum bids are over and telcos have spent heavily at the auction. Will this amount trickle down to the end-user? Experts opine that telcos could roll out 5G on premiere pricing to help them rake back the spent cash.
 
The 5G spectrum bids
 
Overall, Reliance Jio, Airtel, Vodafone Idea and Adani Data Networks have now bagged 51,236 MHz spectrum worth Rs 1,50,173 crore; which is more than the amount previously estimated by analysts. Experts see this return on bids, a result of the aggressive bidding that many telcos vied for.  
 
When is 5G likely to launch in India?
 
Telecom minister Ashwini Vaishnaw has announced that the 5G spectrum roll out is likely to take place October onwards and the country-wide roll out is likely to take place within a year. Reliance Jio is likely to be the fastest to launch 5G services in India, according to a statement from the company. “We will celebrate Azadi ka Amrit Mahotsav with a pan India 5G rollout. Jio is committed to offering world-class, affordable 5G and 5G enabled services,” said the newly-appointed chairman of Reliance Jio, Akash Ambani. Airtel and Vodafone Idea, because of their legacy infrastructure may be slightly delayed in their 5G rollout.
 
Higher mobile bills are likely
 
A report by Normura has suggested that telcos have two options to offset the extensive 5G spectrum purchases by either increasing prices for their existing subscribers or by launching 5G services at a premium. By Normura estimates, tariffs increased by 4 per cent could allow telcos to pay for their 5G spends. The report also suggests that telcos could launch their 5G services at a 30 per cent premium to bear the costs of the spectrum acquisition.
 
What other experts expect about tariff hike
 
Crisil: In a bid to ensure mass adoption of 5G, telecom companies may raise tariffs for 4G services, too, despite two rounds of major tariff hikes effected in December 2019 and November 2021, respectively. We expect another tariff hike for 4G services in the second half of the current fiscal.  
 
Emkay: We have baked in 15 per cent tariff hike in our assumption along with SUC savings of Rs 800 crore and Rs 2,000 crore in FY24 and FY25, respectively. We believe that spectrum related payout and Adani’s potential entry in the B2C space is now behind and focus will shift towards tariff hike quantum and timeline.  
 
Jefferies: We believe tariff hikes are likely by end-CY22, as telcos would focus on monetisation to offset the hefty spectrum commitments.
 
Goldman Sachs: We continue to expect a tariff hike before the end of calendar year 2022 and view that as a next catalyst for the sector.

Also read: 5G spectrum auctions: Why Reliance Jio's bid for the 700 Mhz band is a masterstroke

Also read: 5G spectrum sale: Here's what your telecom operator bought