Industry ramps up supply chain for 5G launch in 2021
Experts said stressed financials of Bharti Airtel Ltd and Vodafone Idea Ltd (Vi) could discourage them to participate in the 5G launch, especially in view of the costs involving fiberization and the pricing of spectrum.
There is much excitement about the anticipated launch of 5G (fifth-generation) telecom services in India, but the government’s spectrum pricing strategy may be a damper. While the evolving ancillary segments are working on the backbone infrastructure for the 5G roll-out following Reliance Industries Ltd chairman Mukesh Ambani’s assurance that Reliance Jio Infocomm Ltd will launch 5G wireless service in the second half of 2021, experts said India is, however, not 100% ready.
Telecom equipment manufacturers such as Sterlite Technologies Ltd (STL) said India has been developing 5G infrastructure, but a pan-India roll out will require improving the device, spectrum, wireless and fibre optic ecosystem. “India has the capability of rolling out 5G as we have been building the infrastructure for some years now. However, for a countrywide end-to-end deployment, India is not 100% ready… At STL, we will start commercial deployment of open-RAN (open radio access) that is required for 5G by the second half of 2021,” said Anand Agarwal, group chief executive, STL.
Experts said stressed financials of Bharti Airtel Ltd and Vodafone Idea Ltd (Vi) could discourage them to participate in the 5G launch, especially in view of the costs involving fiberization and the pricing of spectrum. Airtel and Vi are sitting on massive debts but continue to offer among the lowest tariffs in the world. The telcos have also repeatedly called for affordable spectrum.
Analysts said the airwaves auction in March may see limited participation from Airtel and Vi due to high reserve prices. Jio, however, is likely to buy spectrum in the 700 megahertz (MHz) band, which is best suited for 5G services.
Meanwhile, phone makers have also started producing 5G devices. Faisal Kawoosa, founder, techARC, said that India imported nearly two million 5G smartphones in 2020. “While most of these were in ultra-premium range, this year, any new smartphone priced above ₹30,000 should support 5G,” Kawoosa said, adding that 7-9% of all smartphones sold in India in 2021 are likely to support 5G, making it nearly four times of the imports.
The primary impact of 5G roll-out will be on the commercial ecosystem and many companies are readying to meet that demand. According to Agarwal, global supply chains have already matured and are 5G-ready, which makes it easier to import raw material.