Telcos highly leveraged to invest in 5G network now, says government

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Published: June 27, 2019 6:45:42 PM

While India has become one of the largest data consumers in the world courtesy the cheap plans, it has resulted in consolidation of major players, erosion of profits and also a few bankruptcies.

The telecom ministry has committed to rollout 5G trials in the next 100 days. (Reuters photo)The telecom ministry has committed to rollout 5G trials in the next 100 days. (Reuters photo)

Even as the Government takes initial steps to initiate 5G operations, a senior official Thursday sounded skeptical of the highly leveraged telecom industry’s ability to invest in the new-age networks. The telecom ministry has committed to rollout 5G trials in the next 100 days. “(a) key issue is the capacity of the industry to invest, to raise capital because 5G network will not come without investments,” Anshul Prakash, an additional secretary in the Department of Telecom said speaking at the ‘5G India 2019’ forum here.

He said the “appetite” of the industry for investments and the ability to “navigate” the way forward will have to be gauged going forward. Domestic rating agency Crisil pegs the overall debt of the sector at Rs 4.3 lakh crore as of March. It can be noted that the entry of the deep-pocketed and aggressive Reliance Jio has changed the industry fundamentally. While India has become one of the largest data consumers in the world courtesy the cheap plans, it has resulted in consolidation of major players, erosion of profits and also a few bankruptcies.

Meanwhile, Prakash said 5G applications which get evolved have to be socially relevant in areas like agriculture and security, and added that cars without drivers “may not be the best use” in India. Introduction of 5G also poses a slew of “security issues”, he said, without elaborating on the same.

“We will see how we are able to ring fence…how we will be able to isolate or quarantine machines,” he said. The comments comes amid Chinese equipment maker Huawei being under a cloud and facing regulatory actions in other markets. He said the 5G needs to lead to socio-economic transformation of the country. Conceding that there will be loss of jobs due to the technological interventions, there will be other jobs which will be created. Prakash said the upcoming spectrum auctions will include airwaves for 5G networks as well. The industry also went public with its reservations on the policy moves, and reiterated its refrain with the reserved prices.

“If you want (to) make (cost of) services lower and to do that base price has to be lower,” Reliance Jio’s senior vice president V L Shankar said. Bharti Airtel’s chief regulatory officer Ravi Gandhi said the ability of the operators to get revenues off the same spectrum has gone down unlike the last time when they had bid aggressively for the same. He said 5G will require ten times the towers and base stations as the earlier generations, and hence, there is a need for the industry to collaborate more. Vodafone Idea’s executive VP Rajesh Singh also stressed on the need for better collaboration between industry players.

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