Bharti Airtel is expected to add 41,000 5G radio in FY23 and 134,000 in FY24, according to a research note from ICICI Securities.

This means Bharti Airtel will have loaded 5G on 50 percent of its towers with 3500MHz band and 10 percent with 26GHz band for capacity and FWA. Bharti Airtel should start re-farming 2100MHz band from FY25, and subsequently a few 1800MHz in future to 5G.

Bharti Airtel is expected to have 85 percent of towers loaded with base 5G band by FY27 and it will have an average 1.85x 5G radio/tower in the same period.

A 5G radio will cost Rs1.2mn/radio which will decline by 5 percent each year and re-farming will cost 0.2mn/radio. This implies Bharti Airtel will have to spend total Rs309bn in three years on 5G radio. Bharti Airtel will strengthen 5G backhaul with deployment of E-band microwave on towers loaded with 5G. The cost estimated is Rs0.2mn/MW equipment. This will add total spend of Rs25bn in three years. Bharti Airtel will have to add fibre which will cost Rs120bn cumulatively in the next three years. Bharti Airtel is likely to spend Rs454bn on 5G over FY23-25E.

Reliance Jio is expected to add 89,000 5G radio in FY23 and 182,000 in FY24. This means Jio will have loaded 5G on 65 percent of its towers with 3500MHz / 700MHz band (including CA) and 25 percent with 26GHz band.

Jio will also start refarming 1800MHz band from FY25, and subsequently a few 2300MHz in future to 5G. Jio is expected to have 95 percent of towers loaded with base 5G band by FY27 and it will have an average 1.96x 5G radio/tower in the same period. 5G radio will cost Rs1.8mn/radio (higher due to two radio or CA) which will decline by 5 percent each year and re-farming will cost 0.2mn/radio. This implies Jio will have to spend total Rs604bn in three years on 5G radio.

Jio will also rollout 5G backhaul using E-band microwave on 20 percent of 5G loaded tower. The cost estimated is Rs0.2mn/MW equipment. This will add total spend of Rs20bn in three years. Jio will have to spend Rs30bn cumulatively in the next three years for deployment of core. Jio is likely to spend Rs655bn on 5G over FY23-25E.

Capex by Airtel and Jio for 5G rollout will be lower than 4G as it was deployed on multiple spectrum bands – 900MHz, 1800MHz, 2100MHz and 2300MHz vs only 3500MHz for Airtel’s 5G, while 800MHz, 1800MHz and 2300MHz vs 700MHz and 3500MHz for Jio’s 5G.

Airtel has spent Rs1,115bn on 4G over FY17-22 and Jio has invested Rs1,668bn (green field operation and also included cost capitalisation). Airtel is expected to spend Rs454bn on 5G and allied Capex over FY23-25E (Rs666bn over FY23-27E) to reach 5G coverage of 70 percent by FY25E and 85 percent by FY27E.

Jio is expected to incur Rs655bn on 5G and allied Capex over FY23-25E (Rs940bn over FY23-27E) to reach 5G coverage of 75 percent by FY25E and 95 percent by FY27E.

Airtel has guided for total India Capex of Rs750bn for the next three years wherein in FY23 and FY24, capex will be relatively high, and it will start tapering FY25 onwards. Airtel has already reached >70 cities in 5G rollout and is likely to have presence in 300 cities by March 2023. Airtel expects pan-India 5G footprint by end-March 2024.

Jio has announced total 5G investment of Rs2,000bn which includes Rs900bn towards spectrum, Rs600-700bn towards network rollout and remaining for ecosystem development. Jio is targeting to rollout 5G pan-India by December 2023. This large upfront 5G capex is likely to restrict cashflow generation for Airtel / Jio over the next two years.

Airtel is rolling out non-standalone 5G (NSA-5G) and it will use 3500MHz band for downlink and L-1800 for uplink. The uplink on L-1800 band helps Airtel coverage by additional 100-300mts which will improve experience vs otherwise only 3500MHz based 5G network.

Airtel will be mounting largely integrated radio (radio and antenna), while 4G BTS will be used with additional 5G slot. NSA-5G will use core of 4G. For backhaul, Airtel will require to strengthen its fibre footprint, but it will be less pressed due to E-band (71-76/81-86 GHz) allocation. E-band can provide a microwave throughput of up to 10Gbps which can help maintain reasonable quality of 5G services with one-hope fiberisation.

Jio is rolling out standalone 5G (SA-5G) and it will use a combination of 3500MHz / 700MHz with carrier aggregation. This will help Jio provide superior experience deep into the market due to sub-GHz spectrum. Jio will need to invest in separate core for 5G. Jio is relatively better placed with strong fibre network for backhaul vs Airtel.

Airtel  had 118,000 MBB BTS at end-FY16, and it has expanded to 752,000 by end-FY22 which means it has added 634k BTS. Airtel has rolled out 4G using multiple spectrum bands – 900MHz, 1800MHz, 2100MHz and 2300MHz which implies the equipment required was much higher compared to 5G where Airtel is rolling out 5G services on only 3500MHz spectrum band. Airtel has simultaneously strengthened its fibre presence. Airtel spent Capex of Rs1,115bn (average spend of Rs186bn pa) in mobile services.

On 4G, Jio’s investment has been higher due to green field operation set-up and cost capitalisaton. Jio has spent Capex of Rs2,274bn which also includes Capex on tower and optic fibre which it has divested into separate InVITs worth Rs606bn. Therefore, adjusted for tower and fibre capex, 4G rollout (includes cost capitalised) costed Rs1,668bn since FY15.