Mukesh Ambani’s next headache is 5G: $84 billion dilemma vexing Jio, Vodafone-Idea, Bharti Airtel

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Published: June 20, 2019 9:53:39 AM

The immediate challenge in India would be the investment needed for the network, which the Telecom Regulatory Authority of India estimates could be as much as $70 billion.

The trials for 5G are set to commence by the end of this month5G could be the catalyst for India’s digital economy that has the potential to reach trillion by 2025.

After racking up $59 billion of net debt to survive a brutal war in the world’s second-biggest phone-services market, some of India’s billionaires are bracing for more as their next battle looms: 5G. India seeks to raise $84 billion this year from a sale of airwaves — most of it for the new technology tipped to revolutionize connectivity. That’s posing a conundrum for the carriers controlled by tycoons including Mukesh Ambani, Asia’s wealthiest man. Investment would mean more borrowings, but the reward could be revenue streams never seen before.

Operators may soon decide how much more pain they can endure for a high-speed wireless network that can offer better user experience in streaming, gaming and entertainment in a market where Netflix Inc. to Amazon.com Inc. are making inroads. With applications ranging from manufacturing to education and health care, 5G could be the catalyst for India’s digital economy that has the potential to reach $1 trillion by 2025, according to a report by Deloitte.

‘Competitive Parity’

“Any player missing on the 5G service offering is likely to see erosion of market share,” said Alok Shende, a Mumbai-based principal analyst for telecom at Ascentius Insights. “There’s all the more case for maintaining competitive parity to remain in the game. Offering a forward path to customers is important.”

Bharti Airtel Ltd. and Vodafone Idea Ltd., the two biggest carriers, didn’t respond to request for comments on their 5G plans, while Ambani’s Reliance Industries Ltd. said it won’t comment on the spectrum auction.

While 5G offers potential in augmented reality, virtual reality, connected cars, autonomous drones, smart homes and cities, the real promise for a country like India lies in rural areas, said Prashant Singhal, global head of telecommunications at Ernst & Young.

The technology could address some of the basic challenges due to lack of infrastructure in health care and education. For instance, an experienced surgeon in a major urban hospital can advise an in-theatre doctor in a small town to perform surgery over a real-time 5G connection or a holographic image of a teacher could be beamed to a classroom in a village, he said.

Most of Asia’s largest wireless carriers are in the process testing 5G networks, with plans to introduce them commercially in 2020.

World’s First

South Korea’s SK Telecom Co. unveiled its 5G network for public use in April, calling it the world’s first such full commercial roll out. China issued 5G licenses to its three main operators earlier this month, raising the prospect of services starting as early as this year. India plans to deploy its own next year.

The immediate challenge in India would be the investment needed for the network, which the Telecom Regulatory Authority of India estimates could be as much as $70 billion. That amount will further dent the finances of operators that are in the midst of efforts to pare debt piled over the past decade.

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