The days ahead are going to witness a revolution in terms of network connectivity and the real-time data processing with the existence of 5G networks, and India is going to be one of those countries to adopt 5G, thanks to some networks that are working on it already.
Bharti Airtel, one of the leading operators in the country has big bets into the upcoming technology and thus are the huge investment plans being discussed. It is reported that Airtel may invest about $8 billion in the next three years to not just get into the 5G spectrum but also expand the current 4G network to areas where getting a decent network connection seems hard for now.
It is a clear plan for the network for the upcoming three years, where these two major things are in focus, and while 4G expansion is going to continue, the 5G rollout testing will be something to look out for. Rajiv Sharma, co-head of research at SBICap Securities, estimates Bharti Airtel will need to invest “an incremental $5 billion (Rs 35,000 crore) over the first three years even for a selective 5G rollout, and an additional $3 billion (Rs 21,000 crore) for 4G expansion, for which mobile pricing will need to be revised upwards, primarily to support upcoming investments in 5G spectrum and networks.”
The big investments and funds have been partially secured from the mega fundraise via rights issue, bond sales, and there is an upcoming IPO in Africa that will be able to help correct the balance sheets and cut leverages, but since there is a need for both, 4G expansion and the 5G rollout, the ultimate source should be the current subscribers and the tariff plans.
Rajiv Sharma cleared the air about the increase in mobile tariffs, which will ultimately happen, to not happen anytime soon as a meaningful increase in mobile pricing is at least 2-3 quarters away. The telecom ministry has set 2019 as the year to put up 4G and 5G airwaves for sale but Airtel has said that it will buy 5G airwaves only if prices are reduced, which could be one possibility as Airtel is a strong stakeholder in the telecommunications industry in the country.
Although Airtel has seen the ARPU to go up in the last quarter and touch Rs. 123, Gopal Vittal, Bharti Airtel’s managing director (India & South Asia) said that this current ARPU hasn’t reached sustainable industry levels, even though Bharti Airtel is as close to Reliance Jio in terms of ARPU, and beating the network in terms of average data and call usage.
The key takeaway here is that Bharti Airtel will be one of the early adopters of the 5G testing and rollout, just like how the active participation was with 4G networks. The estimated $8 billion investment will be phased and will have its sources, with one of them being the revenue made from the subscribers.