After 5G Auction, Telecom Firms May Hike Tariff On Bidding Costs: Report

The auction for 5G spectrum in India has recently concluded after witnessing sales of a record Rs 1.5 crore worth of airwaves. This was India's biggest spectrum auction so far where bidders shelled out more than they had expected to dominate the telecom sector..Now, analysts are of the opinion that these telecom companies might need to increase their tariffs by 4 percent in order to compensate for the extra spending in the auction, reported Economic Times..Reliance Jio Infocomm emerged as the highest bidder at the auction grabbing nearly half of the airwaves that were on sale..According to experts, Jio would be in a need to push its rate slightly upwards more than its rival companies like Bharati Airtel and Vodafone Idea (Vi)..Earlier this year, the government had abolished the spectrum usage charge (SUC) for the 5G spectrum auction. Hence, this will bring significant savings for the telecom companies and they wouldn't need to hike the tariff too much..According to Nomura Research, with significant SUC savings, the net annual expenditure for spectrum for telecom companies would necessitate either a moderate 4 percent additional hike on overall subscribers or a 30 percent premium for 5G plans vs. the well-liked 84-day, 1.5GB/day 4G plan..The report highlighted that Jio would need to bring higher tariff hikes as its annual net spectrum outlay is higher at Rs 5,290 as compared to Airtel and Vi which have Rs 1,430 crore and Rs 720 crore net spectrum outlay, respectively..Experts suggested that Jio may have a hard time monetizing its Rs 39,270 crore expenditure on the 700 Mhz band, as it is majorly used in the rural markets where adoption of 5G services will take time..With the 5G having just made its entry in India, analysts said that the use cases of the new technology are evolving and thus it is difficult to predict if telecom companies will be able to monetise 5G.

After 5G Auction, Telecom Firms May Hike Tariff On Bidding Costs: Report

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