Indian mobile operators will require capital expenditure (Capex) of Rs 187 billion or Rs 18,700 crore for rolling out 5G network in Delhi and Mumbai, Motilal Oswal Financial Services said.
The Capex for obtaining 100MHz mid-band spectrum in Mumbai would be Rs 84 billion, which could increase if the bidding price is higher than the base price decided by TRAI (Telecom Regulatory Authority of India).
Assuming 9,000 sites would be required for coverage with cost at INR 2 million per site, the total Capex requirement for the sites would be INR 18b, taking the total Capex to around INR 100 billion.
Similarly, Capex requirement for 5G rollout in Delhi would be INR 87 billion – assuming 100MHz mid-band spectrum at base price of INR 69 billion.
In terms of mid or low band spectrum, the overall Capex requirement for pan-India coverage would stand at Rs 1.3 to Rs 2.3 trillion.
The report said Indian telecom industry is seeing Capex peak out — particularly for Bharti Airtel and Reliance Jio and increased free cash flows (FCF). However, risks have started emerging due to the increased Capex toward 5G technology upgrade and the upcoming spectrum renewal.
Investments in three key components for a 5G network – Spectrum, Sites and Fiber on mid/low band spectrum with pan-India coverage – would stand at INR 2.3 trillion / INR 1.3 trillion, which should reduce to INR 1.3 trillion / INR 788 billion for coverage of only Metros and A circles. With reduced coverage and INR 1.5 million cost/site, this could reduce to INR 1.6 trillion (mid-band) for pan-India coverage.
Meanwhile, a Credit Suisse report earlier said India is unlikely to see 5G rollout at scale at least till financial year 2023, while spectrum auctions are expected in 2021.
5G network roll out will be gradual in India with about 15 percent penetration by FY25 due to stretched financial position, operators focused on monetizing 4G, lack of compelling use cases and no new entrant threat.
The mobile services revenue in Asia Pacific will increase from $307.4 billion in 2020 to $390.9 billion in 2025 at a compounded annual growth rate (CAGR) of 4.9 percent, according to GlobalData.
India will witness the fastest growth (CAGR of 9.1 percent) in terms of mobile service revenue over 2020-2025, primarily supported by an increase in adoption of 4G mobile.
Aasif Iqbal, Telecom Analyst at GlobalData, said: “The Covid-19 pandemic has posed certain challenges for Asian operators in terms of 5G development and will cause delays in the rollout of 5G services in Asia Pacific.”