5G in India to reach ~300 mn subscribers by March 2025 as Reliance Jio, Airtel roll out aggressively

While Reliance Jio is aggressively rolling out its 5G network across India, the country is expected to have about a third of wireless users or ~300 million subscribers using 5G services by March 2025, said a CRISIL report. This is against the estimated ~20-25 million as of March 2023. The remaining two thirds of users would, however, continue to use 4G. “Subscribers of 5G services will provide a fillip to data consumption because they would uptrade to higher data packs for better speeds, which will drive up overall average revenue per user (ARPU) and return metrics for telecommunication companies (telcos),” CRISIL said.

Telecom companies are on a 5G roll out spree in India, having entered in 300+ cities since October 2022. Reliance Jio has launched 5G services in 277 cities, with the deployment of more than 40,000 sites and almost 2,50,000 cells of 5G network in 700 Mhz as well as in the 3,500 Mhz band. Earlier, Akash M Ambani, Chairman of Reliance Jio Infocomm, had said, “We are on the path to achieve the declared goal to increase the Jio 5G footprint month after month to other cities, towns, and talukas of various State/UTs, and are aiming to cover every town, every taluka, and every tehsil across the nation by December 2023.” Akash Ambani had, in February, listed out areas where 5G could be used to facilitate ease of living.

Bharti Airtel too had announced that it has crossed the 10 million unique 5G user mark on its network. The company, in February, had said that it is well poised to cover every town and key rural areas with Airtel 5G services by the end of March 2024.

Towards mass adoption of 5G

According to the CRISIL report, mass adoption of 5G would gather pace when retail use-cases get unlocked. “Despite identification of a plethora of 5G-led use cases such as smart classrooms, precision farming and intelligent transport systems, adoption hinges on a significant improvement in network infrastructure, which will happen only gradually over the next few years,” it said.

And till then, its adoption would be largely driven by the kind of tariffs that telecom companies are offering currently. Also, the penetration of the 5G device ecosystem among users would decide the fate of 5G services spread. As of now, about 30-35 per cent of the ~150-170 million smartphones shipped in India on an annual basis are 5G enabled. “While the share of 5G smartphones shipments will improve gradually, still low initial value proposition and high cost of the gadget versus a 4G phone would restrict overall 5G adoption to ~300 million users by fiscal 2025,” said Naveen Vaidyanathan, Director, CRISIL Ratings.

In contrast to this, the adoption of 4G services was swifter than 5G with ~60 per cent data users migrated within two years of the launch. This was facilitated because it offered better speeds as compared with 3G and was offered at significantly cheaper tariffs.

“5G could accelerate adoption of over-the-top streaming services and online gaming, which would drive data demand further. Consequently, average data usage per subscriber per month is expected to rise to ~28-30 GB by fiscal 2025 from ~20 GB at present,” said Rounak Agarwal, Team Leader, CRISIL Ratings. The growth in adoption of 5G will drive up ARPU to ~Rs 250 over the medium term, said CRISIL. Subsequently, the increase in ARPUs could drive up the sector’s return on capital employed (RoCE) to 12-14 per cent amid investments of Rs 2-2.5 lakh crore planned for 5G networks over the medium term. Currently, RoCE is a modest 6-8 per cent.