NEW DELHI: India’s telecommunications giants are likely to make muted bids at the 5G spectrum auction in July as they worry they will lose around 40% in potential revenue due to the allocation of some airwaves to private networking companies, industry sources said .
Top player Reliance Industries’ Jio and opponents Bharti Airtel and Vodafone Idea have failed to push New Delhi to stop the award that will allow several businesses, including Amazon.com and Tata Consultancy Services, to get airwaves without auction.
“The telecommunications companies are quite upset, there will be an estimated 40% potential loss of 5G revenue,” said SP Kochhar, director general of the Cellular Operators Association of India, which represents the three telcoes.
They relied on demand from the business side to justify billions of dollars worth of investments, as the uptake by price-conscious retail consumers will be slow, Kochhar added.
“It’s a big disappointment.”
The rise of private 5G networks is obscuring the business case for the telecommunications companies, which are now likely to make subdued bids at the auction, five other telecommunications industry executives told Reuters.
Reliance, Airtel and Vodafone did not respond to Reuters emails requesting comment.
However, the government said that allowing private networks, such as in South Korea and Germany, would encourage innovation of automation and other technologies in places such as factories or ports, without worrying about bandwidth or delay issues.
Broadband India Forum (BIF), which represents technology firms such as Tata Consultancy and Amazon.com, said private 5G networks will accelerate digital transformation.
‘RISK OF DILUTION’
The launch of 5G services in the world’s number 2 mobile market after China is a “watershed moment” for the country and the global 5G market, the research group Omdia said this month.
About 50% of India’s businesses want to start using 5G within 12 months and private network providers are in demand, Omdia said in its report.
Analysts at India’s IIFL Securities have labeled a “risk of dilution of telco’s 5G-linked upside of businesses”.
Telecommunications companies have already complained about “too high” base 5G spectrum prices, which are considered to be among the highest in the world.
And now with private networks expected to break away on demand, telecommunications giants are likely to bid for just four of the 10 bands offered for an estimated $ 9 billion, IIFL said.
Industry group GSMA says overall spectrum costs in India as part of telco’s annual recurring revenue stood at 32%, the highest in the world.
The bleak prospects come as Airtel and Vodafone unleashed a price war unleashed by Reliance in 2016.
Airtel and Vodafone have reported losses in recent years, also squeezed across the spectrum due to the government, although recent price increases for mobile data have started slowly to help at least the former clock up.
CATCHED NETWORK
The potential loss for telecommunications firms is a boon for companies planning to set up private 5G network services. Worldwide, more than two dozen countries have paved the way for such networks.
India has said there will be no access or licensing fee for 10-year licenses for private networks, which can be built by firms with a net worth of more than 1 billion rupees ($ 13 million).
They will have to pay an application fee of 50,000 rupees ($ 634). It is not clear if there will be any other charges.
The spectrum will be allocated to “demand studies” and regulatory clearances.
The government intends to start deploying 5G by the spring of 2023 – which can offer data speeds much faster than 4G.
A public telecommunications network optimizes the needs of the masses, but the different requirements of an enterprise “can only be achieved through dedicated private 5G networks”, BIF said.
“Private 5G networks offer India an excellent opportunity to catch up with the world,” BIF said in a statement in June.