With 1.2 billion mobile phone users and over 750 million smartphone users, India is one of the world’s largest mobile markets and has a penetration rate of 94 per cent in 2021. Smartphone users are growing at a 6.5% CAGR from 2021 to 2026, with a target of 1 billion by 2026.

The 4G network covers approximately 98% of the population, and 87% of smartphones are 4G enabled. India has one of the world’s cheapest data rates, enabling it to reach an impressive milestone for 4G penetration in just five years. The country already has 3 million 5G-enabled devices.

The Government of India (GOI) started making its plans regarding 5G – Next Generation Wireless Technology in 2018. The 5G spectrum was held in August 2022, and services are likely to launch by the end of October 2022. Mukesh Ambani, Chairman of India’s largest telecom service provider (TSP) Jio, also made an announcement about the scheduled launch of 5G services during Diwali at the 45th Annual General Meeting (AGM) of the Oil-to-Telecom conglomerate.

Challenges for 5G rollout in India

• Low fiberisation footprint – only 30% of telecom towers are currently connected, presenting the need for TSPs to 2X the figure for an efficient 5G launch and adoption.
• ‘Make in India’ hardware challenge, and the ban on Chinese foreign OEMs like Huawei & ZTE limits the vendor options for telcos.
• 5G spectrum cost is about 30% higher than the global average and can impact future cashflows.
• Choosing the optimal 5g technology standard – While the advantages of 5Gi are clear, it raises launch costs and causes interoperability issues for telcos. Hence, the conflict between the homegrown 5Gi and global 3GPP standards must be resolved.

Current state of 5G in India

Figure 1: Journey of 5G in India

5G spectrum auction

Figure 2: Spectrum purchased by telcos

India’s three leading telcos and Adani Data Networks Ltd bought 71% of the total spectrum of INR 1.5 trillion (US$ 18.9 billion). Reliance Jio became the top bidder, with a massive investment of INR 88,078 crore (US$ 11.1 billion), followed by Airtel and Vodafone. Adani was a surprise entry, having purchased a high-band spectrum for its private network. Overall, the spectrum auction came close but did not achieve the expected target of INR 1.95 trillion (US$ 24.43 billion).

Figure 3: Spectrum distribution among telcos

Jio

• Jio was the most aggressive bidder, investing a total of INR 39,270 crore (US$ 4 billion) for 40% of the available spectrum in the 700MHz frequency band
• Purchased 24,740 MHz spectrum in 700 MHz, 800 MHz, 1,800 MHz, 3,300 MHz, and 26 GHz frequency bands for a total of INR 88,078 crore (US$ 11.1 billion).

Bharti Airtel

• Invested INR 43,084 crore ($5.4 billion) to buy a 19,867 MHz spectrum in various frequency bands

Vodafone Idea

• Invested INR 18,799 crore ($2.37 billion) for 6228.4 MHz, focusing on the 3300 MHz and 26 GHz frequency bands in certain targeted circles

Adani Group

• Entered the auction unexpectedly through Adani Data Networks, purchasing 400 MHz in the 26 GHz frequency band for INR 212 crore ($26.6 million) to set up their private network.

Government support to boost 5G

1. Zero usage charges (SUC) on spectrum received in 5G auctions, relieving service providers of telecom network operating costs.
2. Telcos no longer need to provide a financial bank guarantee equal to one annual instalment.
3. Instalment payments for spectrum (20 equal annual instalments) replace the requirement of making advance payments by successful bidders.
4. Bidders can return the spectrum after 10 years without any further obligations related to the outstanding instalments.

Enterprise private 5G networks

Industry 4.0 applications, such as machine-to-machine communications, IoT, and AI facilitate innovation. Across automotive, healthcare, agricultural, energy, and other sectors, the government encourages the setting up of Private Captive Networks.

1. Telcos can build a private network for enterprises.
2. DoT has the 26GHz frequency band primarily reserved for building private captive networks.
3. Enterprises can also acquire spectrum to set up their private network.
4. There is no license fee for companies bidding to acquire a spectrum.
5. They will be charged INR50,000 (US$ 629) as a processing fee and will only have to pay for the amount of spectrum they own.

Timelines for commercial availability

Reliance Jio

1. Plans to fully cover India with 5G by December 2023.
2. Intends to launch 5G services in Delhi, Mumbai, Kolkata, and Chennai before the auspicious festival of Diwali in October 2022.
3. Successfully tested its 5G RAN services in 9 cities in India.
4. Launch the most recent 5G technology, standalone access (SA) 5G, independent of its 4G network.
5. Ensures 5G will not be a premium service to grant accessibility to everyone by securing a coveted 700 MHz frequency band that can provide a 6–10 km signal range throughout all 22 circles in India.

Bharti Airtel

1. Anticipated to roll out 5G services in 13 major cities by October 12 2022.
2. Airtel’s 5G network will be non-standalone access (NSA), leveraging its current 4G infrastructure for its 5G services.

Vodafone Idea Limited (Vi)

1. Acquired the mid-band 5G spectrum (3300 MHz frequency bands) in 17 priority circles and 26 GHz bands in 16 circles.
2. Vi users will get access to 5G between 2023 to 2024.

Collaboration is key to success in the 5G era

Table 1: Collaboration by telcos

Airtel has successfully tested and built India’s first private 5G network at the BOSCH plant in Bengaluru. Vi is continuing to pursue outside investors for funding. Currently, Vi is in discussion with OEMs and industry leaders for their 5G expansion. And since it has most of its spectrum in high-frequency bands, telco has decided to concentrate on providing enterprise solutions for industry 4.0.

5G will fuel CAPEX spending

Figure 4: Capex investment by Airtel and Jio

According to estimates, Reliance Jio and Bharti Airtel will spend US$ 9.5 billion and US$ 7.9 billion on 5G CAPEX through FY 23–25. However, compared to Jio, Airtel will have a lower 5G CAPEX since it opted for 5G NSA. GoI has released a package of INR 1.64 lakh crore (US$ 20.65 billion) to revive BSNl, of which 60% will be allocated for infrastructure building by 2025. This investment is set to impact the total telco CAPEX in the country significantly.

Way forward for telcos

Jio clearly has the advantage here, being the largest owner of the spectrum. By 2023, Jio will spearhead forth, potentially owning the largest 5G subscriber base. Meanwhile, Airtel will launch NSA 5G, allowing free control for Airtel to use existing 4G base stations for 5G services. With this, Airtel can shift the odds in their favour as Jio will be offering SA 5G, which will take time since it would need to build the complete network infrastructure. What’s more exciting will be the development of private 5G networks in the country. The low-cost entry barrier should spur the adoption of industry 4.0 applications across the diversity of India’s enterprises.