Indian telcos’ 5G bids seen muted as private firms jostle for airwaves -sources

People stand in front of a billboard depicting a 5G network at the India Mobile Congress 2018 in New Delhi, India, October 26, 2018. REUTERS/Anushree Fadnavis

NEW DELHI (Reuters) – Indian telecom giants are likely to bid silently in a 5G spectrum auction in July, amid fears they will lose about 40% of potential revenue due to allocating some of the companies’ airwaves to private networks. Industry sources said.

Top player in Reliance Industries (RELI.NS) Jio and rivals Bharti Airtel (BRTI.NS) and Vodafone Idea (VODA.NS) failed to pressure New Delhi to halt the privatization that would allow several companies, including Amazon.com and Tata consultancy services, to To get airwaves without auction. Read more

“The carriers are completely upset, and there will be a potential 40% loss in 5G revenue,” said S.P. Kochhar, general manager of the Cellular Operators Association of India, which represents the three carriers.

Kochar added that they were relying on demand from the establishment to justify the multi-billion dollar investment as uptake of price-conscious retail consumers would be slow.

“This is a huge disappointment.”

Five other telecoms industry executives told Reuters that the rise of private 5G networks is easing the business case for telecoms companies, which are now likely to bid silently at the auction.

Reliance, Airtel and Vodafone did not respond to Reuters emails seeking comment.

However, the government said allowing private networks, such as in South Korea and Germany, would spur innovation in automation and other technologies in places like factories or ports, without worrying about bandwidth or latency issues.

The Broadband India Forum (BIF), which represents technology companies such as Tata Consultancy (TCS.NS) and Amazon.com (AMZN.O), said private 5G networks will accelerate digital transformation.

risk mitigation

Research group Omdia said this month that 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.

Omdia said in its report that about 50% of Indian companies want to start using 5G within 12 months, and there is a demand for private network suppliers.

Analysts at India’s IIFL Securities noted “the risk of mitigating the rise of 5G-related companies”.

Carriers have already complained about “too high” basic 5G spectrum prices, which are seen as among the highest in the world. Read more

Now with on-demand private networks expected to decline, the telecom giants are likely to bid only for four of the 10 bands offered for an estimated $9 billion, IIFL said.

Industry group GSMA says India’s total spectrum costs as a proportion of telecom operators’ annual recurring revenue reached 32%, the highest in the world.

The bleak outlook comes as Airtel and Vodafone recoil from a price war sparked by Reliance in 2016.

Airtel and Vodafone have reported losses in recent years, also reduced by spectrum fees owed to the government, although recent increases in mobile data rates are slowly starting to help the former at least turn around the clock. Read more

captive network

The potential loss for carriers is a boon for companies planning to offer private 5G network services. Globally, more than twenty countries have paved the way for such networks.

India said there will be no entry or licensing fees for 10-year licenses for private networks, which can be built by companies with a net worth of more than 1 billion rupees ($13 million).

They will have to pay an application fee of 50,000 rupees ($634). It is not clear if there are any other fees.

The spectrum will be assigned after “demand studies” and regulatory approvals.

The government aims to start rolling out 5G – which can provide much faster data speeds than 4G – by the spring of 2023.

The public telecoms network improves the needs of the masses, but the changing demands of the enterprise “can only be fulfilled through restricted private 5G networks,” BIF said.

“India’s private 5G networks provide an excellent opportunity to catch up with the world,” BIF said in a statement in June.

Additional reporting by Aditya Kalra and Moncef Vengatel in New Delhi; Additional reporting by Subanta Mukherjee in Stockholm. Edited by Himani Sarkar

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