Bharti Airtel Ltd has said that 5G monetization remains a challenge because of the lack of compelling customer use cases, underscoring why telecom operators have yet to recover their investments in spectrum and network rollouts four years after the technology's launch.
“5G data is currently offered free for all postpaid customers and select prepaid users with unlimited packs at certain price points,” India's second-largest telecom operator said in its FY26 annual report released on 11 July.
Airtel bought 5G spectrum worth ₹43,084 crore in the August 2022 auction, about half of Reliance Jio's ₹88,078 crore purchase. The company has since spent about ₹1.45 trillion on capital expenditure in India, including the 5G rollout, between FY23 and FY26, according to its quarterly reports.
While consumers see little difference between 4G and 5G that justifies paying for premium services, enterprise use cases have also been slower to take off than the industry expected.
A ray of hope
However, Airtel sees the growing 5G smartphone ecosystem and rising data consumption as growth opportunities, with fixed wireless access (FWA) emerging as a key use case in the home broadband segment by expanding the addressable market and extending connectivity to areas with limited fibre coverage.
It also sees an opportunity to upgrade nearly 90-million-customer base to postpaid plans, along with the potential for feature phone-to-smartphone conversions. Its postpaid subscriber base stood at 29 million as of 31 March.
In a bid to increase 5G monetization, Airtel has introduced a premium postpaid service, Fast Lane, that uses 5G network slicing to provide faster, more reliable connectivity during heavy network congestion. So far, it has not charged incremental pricing for the service.
The 5G focus also conicides with Airtel's emphasis on tariff repair to support the industry's long-term health. For a long time, the telecom operator has been batting for a more differentiated pricing architecture based on data allowances and usage tiers. Small, medium, large and extra-large plans with varying allowances will create a natural upgrade cycle, pushing up average revenue per user (Arpu).
As of 31 March, Airtel’s 5G customer base stood at 188 million, compared to Jio's 268 million. While Airtel is moving towards 5G Standalone readiness, in which 5G runs on its own network rather than relying on 4G, Jio aims to migrate its entire subscriber base to 5G by 2030.
Need of the hour
“The need for tariff repair becomes even more critical amid limited 5G monetization due to a lack of compelling customer-centric use cases, with 5G data currently offered free for all postpaid and select prepaid users (on plans with daily 4G data allowance of 2GB and more)," said analysts at JM Financial in a 13 July note.
The analysts at the brokerage also expect greater visibility into a 12-15% tariff hike over the next three to six months, with easing inflationary concerns and the industry’s need to improve return on capital employed (RoCE).
Among other challenges, Airtel said global disruptions are causing supply chain disruptions and cost inflation, thereby restricting network and non-network deployments. It said rising costs may impact profitability.
In FY26, Airtel saw a 22% rise in revenue from operations to ₹2.1 trillion and a 28.7% increase in earnings before interest, taxes, depreciation, and amortization to ₹1.2 trillion. However, net profit fell 20.4% to ₹26,695 crore. Its Arpu stood at ₹257 per month compared to Reliance Jio's ₹214.