India is staring at the onset of 5G technology at a time when the telecom companies in the country are struggling with weak finances, low profitability, intense competitive pressures and existing infrastructure costs.
5G telecommunication, the widely-awaited next-generation technology, is just around the corner, but may not come into India with a dance, and may rather need government crutches to walk in. India is staring at the onset of 5G technology at a time when the telecom companies in the country are struggling with weak finances, low profitability, intense competitive pressures and existing infrastructure costs. Catering to a huge customer base in a country with a population of over 130 crore people would require a lot of funds to cover the costs of equipment, fibre, and tower installation. This may be difficult for Indian telecom firms.
Adding more burden of new infrastructure costs looks like a far-fetched move for Indian telecom companies at this time when the industry is reeling under intense competition and struggling to keep up margins. “Implementing 5G technology in India will need a tower at every 500 metres, which would generate substantially higher radiation. The license fee can itself cost around Rs 25,000 crore for an operator, which can only be borne by a few companies such as Jio, which can take international loans,” Shrawan Dubey, Circle Secretary, Telecom Officers Association, BSNL, told Financial Express Online.
He added that it is difficult to get such huge loans from banks and therefore the government’s help will be the only way other operators can afford it. A discussion at the World Economic Forum’s India Economic Summit this week may have a solution to 5G funding woes — government support in laying down the infrastructure. Governments and regulators across markets, including in India, must look at 5G as national infrastructure, Magnus Ewerbring CTO, APAC, Ericsson South-East Asia, Oceania, and India said at a discussion at the India Economic Summit in Delhi.
— World Economic Forum (@wef) October 4, 2019
A 5G national infrastructure could help telecom companies with a lesser burden of costs such as infrastructure, licenses, etc. “5G will bring socio-economic growth to nations in every corner of the globe. It will enable a connected, digital society and act as a core foundation for the Fourth Industrial Revolution, building on the scale of billions of connected devices and a global system of vendors,” Magnus Ewerbring of Ericsson said.
Indin telecom companies with legacy infrastructure will have to consider replacement costs before taking the 5G road. “While Reliance Jio focuses on prioritising 5G investments in anticipation of accelerating commercial prospects, other telecom companies seem to be having a more conservative outlook,” said a recent Deloitte report.
New telecom technologies can provide much-needed gains in efficiency and profitability as 5G is a system developed not only to support massive growth in mobile broadband use but also to support broader uses that require secure and reliable connectivity. These include massive machine-type communications such as smart buildings, logistics, fleet management, smart agriculture, and smart meters. 5G also addresses critical machine-type communications such as traffic safety and control, remote manufacturing and industrial applications.