Investments needed in key components for a pan-India 5G network coverage, including spectrum, sites and fibre, is estimated to be ₹1.3-2.3 lakh crore, as per a report by Motilal Oswal Financial Services.
It added this amount should reduce to ₹78,800 crore-₹1.3 lakh crore for coverage of only Metros and A circles, with the capex requirement for 5G roll-out in Mumbai pegged at ₹10,000 crore, and for Delhi at ₹8,700 crore.
“The Indian telecom industry is seeing capex peak out (particularly for Bharti and RJio) and increased free cash flows. However, risks have started emerging due to the increased capex toward 5G technology upgrade and the upcoming spectrum renewal,” the report noted, adding that the spectrum which will be up for renewal in the next 6-12 months, would require an investment of ₹28,000 crore for Reliance Jio, ₹12,900 crore for Bharti Airtel and ₹8,300 crore for Vodafone Idea at reserve price.
Further, the report noted that with no new players, nascent use cases, limited incremental revenue potential, spectrum woes along with an inherently low ARPU structure in India, telcos may wait for the 5G technology to stabilise globally and see reduction in equipment cost, before deploying fresh technology, which could take 3-4 years.
“Undoubted, the quantum of investment is exorbitantly high given the stressed balance sheet of telcos and the low prevailing ARPUs. Therefore, we believe in the initial phase, telcos may selectively choose spectrum in a few circles and run 5G for select enterprise-driven Internet of Things (IoT) operations,” it said.
