New Delhi: Switching to 5G will need massive investment in fiberisation by telecom companies and such investments in fiberised backhaul infrastructure which provides unlimited capacity and higher speeds has to gain further traction if 5G has to become reality, a report by CRISIL has said.
Lack of financial bandwidth and need for massive fiberisation investment will drive telcos to hive off assets, share networks, or diversify to play the 5G game, says the CRISIL report.
If switching to 4G from 3G was all about rationalising capacity by Indian telecom operators, 5G’s clarion call is fiberisation — and more fiberisation.
But fiberisation is expensive and it comes on top of spectrum costs that are sky-high at current prices. To boot, telcos are saddled with a staggering debt of Rs 4.3 lakh crore as of March 2019.
That is why India is set to witness some tectonic shifts in the fiberisation landscape and the birth of new business models among telcos and tower companies around the launch of 5G, the report cautioned.
It said 5G technology dictates fiberisation levels of over 70 per cent, versus 25-30 per cent levels at present.
CRISIL estimates that if each player were to reach this level individually, Indian telcos may need investments of up to Rs 1 lakh crore only in laying fibre networks over the next 2-3 years.
Higher land cost and right of way approvals make fiberisation cost as high as Rs 1 crore per kilometre in metros, it pointed out. Then, there are also the spectrum purchase costs in the upcoming auctions to shell out.
Already, the reserve price recommended by the Telecom Regulatory Authority of India (TRAI) for 5G spectrum bands is much higher than in countries like the United Kingdom or South Korea.
How much money there is for investment is crucially linked to price-setting at the auctions.
Telcos are seeking revision of TRAI’s base prices for spectrum to be auctioned in this year including 5G. The Department of Telecom has decided to refer the issue back to TRAI.