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5G services in India to attract Rs. 1.5 Lakh Crore investment in 2023, tariff hikes likely: report

5G services in India to attract Rs. 1.5 Lakh Crore investment in 2023, tariff hikes likely: report

5G services in India to attract Rs. 1.5 Lakh Crore investment in 2023, tariff hikes likely: report

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From connecting people to 5G services to reducing operating costs, the country’s revitalized telecom sector is witnessing the flowering of reforms and is expected to attract more than Rs 1.5 lakh crore in investment to build networks over the next the new Year.

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Once a figurehead in India’s growth story, then a debt-ridden segment that has seen many players wither away and now riding the wave of reform as well as heavy investment, the telecom sector has opened a new chapter. in 2022.

While Adani Group is yet to unveil its full fledged plan for the telecom sector, Reliance Industries Chairman Mukesh Ambani has committed Rs. 2 lakh crore investment for rolling out 5G network across the country by December 2023.

“It has been an exciting year due to the launch of 5G, a technology that has been highly anticipated for the past 4-5 years. This is a big step forward. We are looking forward to a robust deployment of 5G next year because this year is only the beginning.

“We are all working on use cases. We are telling state governments, ministries, startups and innovators to come up with innovative use cases in the Indian context, which will unlock businesses and also solve some public problems, some challenges,” the telecommunications secretary said. K Rajaraman told PTI.

He also said that the government will continue to take measures that will reduce the cost of operations for telecom operators, a move that will translate into higher margins for the sector, which had been under the weight of debt for more than 20 years. a decade.

Reliance Jio has committed Rs 87,946.93 crore for the spectrum which it is to pay over a period of 20 years, leaving a balance of Rs 1.12 lakh crore. While the company had invested a partial amount in building its own 5G core, it will invest the majority of Rs 1.12 lakh in capex for 5G in 2023, sources say.

Bharti Airtel is expected to invest in the range of Rs 27,000 to 28,000 crore and state-owned BSNL around Rs 16,000 crore in 2023 for the deployment of a locally developed 4G network by the consortium led by TCS and C-DoT . Later, the system will be upgraded to 5G.

Together, investments worth more than Rs 1.5 lakh crore are expected in the telecom sector.

COAI Director General SP Kochhar said structural and procedural reforms in the telecommunications sector approved by the government last year, such as e-KYC, removing spectrum usage fees (SUC) for spectrum acquired at a future auction, 100% FDI under the automatic route as well as streamlining bank guarantee, adjusted gross income (AGR), interest rates and penalties , and easement of right-of-way (RoW) had a positive impact on the sector in 2022.

Director General of the Association of Digital Infrastructure Providers, TR Dua, said most state governments have followed the reforms led by the Center and have come up with favorable policies for telecommunications infrastructure this year.

Recently, State Minister for Telecom Devusinh Chauhan informed Parliament that telecom operators are installing an average of 2,500 base stations per week to provide 5G services in the country and 20,980 mobile base stations have been installed as of 26 november.

The telecommunications equipment majors – Nokia and Ericsson – have stepped up manufacturing in India. The government has also received investment commitments of Rs 4,115 crore from 42 shortlisted companies under the Production Linked Incentives (PLI) scheme for the manufacture of telecommunications equipment.

Nokia said it was witnessing the world’s fastest rollout of the 5G network in India.

“In 2023, we hope to see continued government support to enable the digital ecosystem to truly harness the benefits of socio-economic applications of 5G technology. 2023 should also see wider adoption of private networks by businesses and consumers. businesses for increased efficiency and security,” a Nokia India spokesperson said.

Ericsson Managing Director, India and Head of Networks, Southeast Asia, Oceania and India, Nitin Bansal, said enhanced mobile broadband (eMBB) and fixed wireless access (FWA) should be the India’s first 5G use cases. This technology will help bridge the digital divide by addressing limited fixed broadband penetration levels and improving the data experience on the go.

Tech Mahindra President, Communications, Media and Entertainment Business, and CEO, Network Services, Manish Vyas said 5G will be used to develop game-changing applications and innovative use cases in sectors such as manufacturing, health, BFSI and autonomous driving.

“We view 5G for enterprise (5G4E) as our next growth strategy, and we are already running several pilot projects around the world,” he said.

IDEMIA India, Senior Vice President, Rahul Tandon, said the introduction of 5G connectivity in India opens up many new capabilities to improve the productivity and security of not only online transactions, but also Machine2Machine (M2M) transactions. .

While telecom operators are investing billions in building a 5G network, a senior Airtel official said there are currently no apps that can help companies monetize 5G.

“5G helps to offload the traffic from 4G network. 5G is a very efficient and better technology, but at present applications like video, games, etc. run well on 4G. We don’t have haven’t seen any apps that can specifically help monetize 5G yet,” the official said.

He also said the company expects growth to come from customers upgrading their service from 2G to 4G, from prepaid to postpaid and from postpaid to home broadband, and increases in prices.

Annual price hikes by telecom operators – Bharti Airtel, Vodafone Idea and Jio – in the range of 18-42% have brought businesses a sustainable level of average revenue per user (ARPU) in 2022.

Vodafone Idea had taken the lead in November 2019 to increase mobile service prices by up to 42%. Bharti Airtel and Reliance Jio have followed VIL in increasing tariffs.

The 2019 rate hike came after a gap of about five years. Data prices fell by 95% to 11.78 rupees per GB in 2017 from 269 rupees per GB in 2014.

Bharti Airtel is running a pilot project to increase its entry-level mobile plan by around 57%. The company has increased the minimum recharge price for a 28-day mobile phone service plan by around 57% to Rs 155 in Haryana and Odisha.

A company official said it will review the outcome of the tariff increase in six weeks to decide whether to raise tariffs across India.

While VIL was able to sail to 2022, 2023 is likely to be a watershed year for the company as the debt-ridden company waits for the government to pick around 33% of the shares under the debt conversion program. interests. in equity.

A note from JM Financial in October 2021 stated that VIL will need to have an APRU of at least Rs 190-200 by March 2023 to survive, but the company is far from good and is struggling to verify the rate of subscriber unsubscribe.


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