Reliance Jio will have a competitive edge over Bharti Airtel on 5G network coverage as and when the services are rolled out, thanks to its purchase of spectrum in the 700 MHz band. Analysts say Bharti will have to play catch-up by acquiring airwaves in this sub-GHz band in future auctions to match Jio’s network quality.
Vodafone Idea, which is already lagging behind the two rivals in terms of 4G coverage, may be further impacted as Jio and Bharti scale up their 5G offerings with higher capacities and enhanced coverage.
The advantage Jio will have with 700 MHz is that it can roll out standalone 5G services, something Bharti and Vodafone Idea would not be able to do. Under standalone 5G services, the core networks of 5G and 4G services are separate and therefore an operator can provide different data speeds to consumers depending upon their need and usage. Further, the 700 MHz band could potentially give Jio an edge in terms of network quality, especially indoors.
“With Jio acquiring 700 MHz, we believe that the company is well placed to roll out standalone (SA) 5G. The advantage of SA 5G is that the company would be able to offer the true low-latency applications, such as slicing. This is difficult for its peers to offer, given the lack of spectrum (telcos cannot roll this out on 4G bands). While 5G SA still lags in terms of handsets, equipment and application, we find Jio better placed than its peers to offer differentiated services. This could help the company poach high-end customers from its competitors – likely increasing competition at the high end,” Bofa Securities said in its report.
It added that with Jio likely to roll out SA 5G, Bharti would be under pressure to have a similar network in coming years. This raises the risk of Bharti acquiring 700 MHz in the next auction, for which pricing is likely to be similar.
Kotak Institutional Equities had similar views. It said Bharti may have to increase spectrum acquisition in future rounds in the sub-GHz bands if network quality lags that of Jio in the coming years.
As reported earlier, Jio has emerged as the top spectrum buyer in the 5G auctions by acquiring a total of 24,740 MHz spectrum across bands, spending Rs 88,078 crore. Its total spectrum holding is now higher than Bharti Airtel and Vodafone Idea. Bharti acquired 19,868 MHz for Rs 43,084 crore, followed by Vodafone Idea, which acquired 6,228 MHz for Rs 18,799 crore.