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June 05, 2019
Mobile price rises in India to be dwarfed by cost of 5G

  • Government to push ahead with 5G spectrum sale in 2019
  • Proposed frequency prices remain high compared with other markets
  • Operators to see price, revenue increases in coming year
  • But 5G rollout costs remain astronomical

India’s mobile operators are set to part with a sizeable amount of cash before the end of this year.

The country’s new government has confirmed that its 5G spectrum auction will take place before the end of the year and despite calls from all sides to lower the cost of frequencies, the regulator is showing little sign of budging from its recommended minimum price levels. Analysts predict revenues will start to rise again this year, but the growth levels predicted will struggle to offset the enormous cost of rolling out 5G.

Having been formally reappointed as India’s communications minister last week, Ravi Shankar Prasad on Monday revealed that the country will begin 5G trials in 100 days and that frequencies will be auctioned off this year. Cue another litany of complaints from within the Indian telecoms sector about the price of those frequencies, as set out by the regulator last summer.

Challenges For 5G In India No Different Than For Europe

ARPU’s are at unsustainable levels in Europe, and the challenges put forth in the article below will also be true of European operators.

Is there such a thing as unhealthy levels of competition? The answer unequivocally is yes.

The cold hard reality is that European operators have massive debt loads; and have been accelerating the sale of the family silver in order to pay down debt levels. One could make a very strong case that the net margins on a per user basis that an operator realizes for a 4G subscriber barely cover the all in costs of the 4G network.

Regulators have to realize that the CAPEX investments in 5G will be the highest on record (higher still if Huawei runs into problems) of any new wireless infrastructure launch. A reasonable rate of return is required in order for wireless operators to bank enough cash in order to pay for the next generation infrastructure required to power next generation use cases.

Expect very significant price differentials for 5G on both the handset and airtime. How are operators going to make these price increases (particularly in B2B where ARPU rates are even worse than retail) palatable to the business community who are experiencing minimal growth in Eurozone countries.

The old paradigms and approaches operators have taken with 3G and then 4G will not work and our operator partners need to fundamentally rethink their go to market strategies on 5G and who pays what in a B2B environment.

Mobile price rises in India to be dwarfed by cost of 5G