Indian telecom operators are forecast to spend around Rs 65,000 crore or $9.6 billion during fiscal 2020 towards their capital expenditure (Capex), as per an ICRA note.
For comparison, Indian telecoms such as Bharti Airtel, Vodafone Idea and Reliance Jio have incurred a Capex of more than Rs 1 lakh crore or $14 billion during the fiscal 2019 — mainly focusing on the expansion of 4G networks.
Steady improvement in sales post the uptick in ARPU levels would result in decline in Capex intensity to around 30-35 percent, Ankit Jain, assistant vice president, Corporate Ratings, ICRA, said.
The ICRA research report indicated that Indian telecoms will not be making 5G investment in the near future. Their spending on 4G network is peaked though telecoms are yet to ensure adequate data coverage in inside homes or buildings.
The Capex intensity, as measured by the Capex / sales ratio has been significantly higher over 50 percent compared to international standards of 17-18 percent. Spectrum acquisition accounts for a majority of Capex and thus debt for the Indian telecom industry.
Indian telecom operators spent more than Rs 3.5 lakh crore in acquiring around 3,100 MHz of spectrum across various bands over the six rounds of auctions. Debt of Indian telecom operators reached at around Rs 5 lakh crore during fiscal 2019. Their debt is expected to reduce to around Rs 4.25 lakh crore as of March 2020.
Bharti Airtel is likely to showcase 5G use cases during the India Mobile Congress on October 14-16. Reliance Jio and Vodafone Idea will not be conducting 5G trials at the IMC this year, Financial Express reported.
Reliance Jio, India’s #1 4G operator, had conducted 5G trials in association with telecom network makers such as Samsung and Ericsson during IMC 2018. Bharti Airtel had partnered with Huawei and Ericsson for its 5G trials. Vodafone Idea did not conduct 5G showcase in 2018.