5G in India has been rumoured to launch for quite some time, with users getting more and more interested in the next biggest advancement in telecom. That being said, it is still far from being a reality. There have been advancements in 5G, with trials in India being recently announced and 13 applications being given approval for testing of 5G networks. It is expected that the proper rollout of 5G in India may occur around early 2022. In relation to this, India Ratings and Research (Ind-Ra) made some statements discussing the factors that will impact the overall rollout of the 5G in India, with some of them being key to the advancement’s success.
High prices of 5G airwaves in India, Capital Expenditure Key Factors
According to the ratings firm, high prices of the 5G airwaves in India, capital expenditure and the willingness of the user to migrate from 2G, 3G and 4G to 5G in India that telecom companies will be incurring in a bid to employ full-scale commercial 5G are some of the variables that need to be addressed. It is key to address them so as to ensure successful implementation of the next-generation technology. If these are overlooked, a proper 5G rollout will face multiple challenges and might not work out as well as one expects. Ind-Ra mentioned that the reserve price for the 5G spectrum is quite high. The reserve price is estimated to yield a return on capital employed of only 7% and the 5G auctions haven’t even been announced yet. Furthermore, the number of users willing to switch to 5G from 4G or 2G and the ARPU (average revenue per user) that they will generate are also key factors that cannot be overlooked. With the current ARPU in India ranging from Rs 121-166 per user on a monthly basis and around 350 million subscribers making use of voice only or 2G services below the ARPU, the viability of 5G for telcos in India is one to worry about. As per another statement by Ind-Ra, despite the financial credit profile of Reliance Jio Infocomm Ltd (IND AAA/Stable), Bharti Airtel Ltd seeming comfortable, the extent of capex that the telcos will incur over 5G for the coming years will also be essential to monitor. For those of you unaware, the Department of Telecommunications (DoT) on Tuesday allowed for telcos in India to commence 5G trials for a period of six months by making use of mid-band (3.2-3.67 GHz), millimetre wave band (24.25-28.5 GHz) and sub gigahertz band (700 GHz) combined with their existing spectrum in the following frequencies -800 MHz, 900 Mhz, 1,800 MHz and 2,500 MHz, for the trial phase. In relation to this, Ind-Ra has said that the move will also help determine the viability of the tech across the nation since telcos are mandated to conduct trials not only in semi-urban areas but also in rural areas.
