India’s telecom giants — Reliance Jio, Bharti Airtel and Vodafone Idea — are likely to spend less during the 5G spectrum auction in July, on worries they stand to lose about 40 percent in potential revenues due to the allotment of some airwaves to enterprises for private networks, Reuters news report said.
Media reports suggest that Reliance Jio, Bharti Airtel and Vodafone Idea have failed to lobby to stop the allocation that will let various enterprises, including Amazon.com and Tata Consultancy Services, to get airwaves without auction.
IDC report in 2021 said worldwide revenue attributable to the sales of private LTE/5G infrastructure will grow from $945 million in 2019 to an estimated $5.7 billion in 2024 with a 5-year compound annual growth rate (CAGR) of 43.4 percent. This includes aggregated spending on RAN, core, and transport infrastructure.
Large enterprises are keen to make investment in a private or non-public 5G network that is a dedicated Local Area Network (LAN) that delivers enhanced internet connectivity to industrial, enterprise, and other customers.
The global private 5G network market size is expected to expand at a compound annual growth rate (CAGR) of 47.5 percent from 2022 to 2030 from $1.38 billion in 2021. Private 5G network is widely preferred across various industry verticals, including manufacturing, energy and utilities, transportation and logistics, aerospace and defense, oil and gas, mining, and government and public safety.
“The telecom companies are upset because there will be an estimated 40 percent potential 5G revenue loss,” said SP Kochhar, director general of Cellular Operators Association of India (COAI), which represents the three telecoms.
Jio, Airtel and Vi were counting on demand from the enterprise side to justify investments worth billions of dollars as uptake by price-conscious retail consumers will be slow.
India government has said that permitting private networks, like in South Korea and Germany, would spur innovation of automation and other technologies in places like factories or ports, without worrying about bandwidth or latency issues.
Broadband India Forum (BIF), which represents tech firms like global IT service provider TCS and Amazon.com, has said private 5G networks will accelerate digital transformation.
The launch of 5G services in the world’s No.2 mobile market after China is a watershed moment for the country and the global 5G market, research group Omdia said this month.
About 50 percent of India’s enterprises want to start using 5G within 12 months and private network suppliers are in demand, Omdia said in its report.
Analysts at India’s IIFL Securities flagged a risk of dilution to telcos’ 5G-linked upside from enterprises.
Telecom companies have already complained of too high base 5G spectrum prices, seen as among the highest in the world.
Since private networks are expected to chip away at demand, telecom giants are likely to only bid for four of the 10 bands on offer for an estimated $9 billion, IIFL said.
Industry group GSMA says overall spectrum costs in India as a proportion of telcos’ annual recurring revenue stood at 32 percent, the highest in the world.