NEW DELHI: 5G technology may be the next game-changer in digital communications, but rolling out a full-fledged 5G network is set to be an exorbitant affair in India. According to a research report from Motilal Oswal Financial Services, the required investment to create such a network would cost Rs 2.3 lakh crore on a midband (3,300-3,600 MHz) spectrum, and around Rs 1.3 lakh crore on a lowband (700 MHz) spectrum.
“Investments in three key large components for a 5G network-Spectrum, Sites and Fiber on mid/lowband spectrum with pan-India coverage would stand at Rs 2.3 lakh crore/Rs 1.3 lakh crore, which should reduce to Rs 1.3 lakh crore/Rs 788 lakh crore for coverage of only Metros and ‘A’ circles,” the brokerage noted.
Even with reduced coverage and a cost of Rs 15 lakh per site, the total launch cost may come down to Rs 1.6 lakh crore-which is still an amount likely to cause serious stress on already unhealthy telecom balance sheets. However, “assuming rollout starting from FY23E, a staggered deployment over the next 4-5 years (in line with 4G investment trend) could insulate the impact to a large extent,” the report observed.
Considering the weak financial situation, India’s telecom companies are likely to wait until the technology is already well-established and proven in other international markets before committing to a full commercial launch. So far, commercial 5G launches have been made in 26 countries and 5G subscribers stood at 10 million in 2019. This number, however, is expected to rise to 2.8 billion by 2025.
“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,” the brokerage said. However, since the expiry dates for spectrum held by RJio (115MHz quantity in the 800MHz band acquired/shared from RCOM), Bharti Airtel (57Mhz quantity in the 1,800MHz band) and VIL (37.8MHz/6.2Mhz quantity in the 1,800MHz/900MHz band) are all set to arrive within the year, companies may need to shell out around Rs 28,000 crore, Rs 12,900 crore and Rs 8,300 at reserve price for the spectrum respectively.