After a somewhat tentative start post the completion of the 5G auction last October, India’s 5G deployment has gone into overdrive. Reliance Jio and Bharti Airtel are the two telcos that are setting the pace, with both projecting to have coverage across urban India by May-June 2023 in phase 1, while subsequent phases would focus on rural and remote areas, with a majority of POPS covered by March 2024.

As of March 2023, India’s telcos had already deployed 116,024 base transceiver stations (BTS) across the country, as per statistics released by the Department of Telecommunications. This is undoubtedly a rapid, if not record, pace of deployment for the first six months of deployment. This record pace is being set despite the very limited involvement of the third winner of 5G spectrum, Vodafone Idea (Vi) due to a paucity of funds for Capex. BSNL, the state-owned carrier, is also not in the picture for 5G now, but more on it later.

The rapid growth of 5G has been enabled by the significant reforms enacted by the Indian government, with abundant spectrum being made available for 5G, both in the globally predominant sub-6 GHz band as well as in mmWave frequencies. Beyond spectrum, the restructuring of the outstanding debt of the incumbent telcos (a combination of pending license and spectrum usage charge fees) has allowed the telcos to preserve their cash flows and allocate resources toward Capex for 5G.

However, much more needs to be done. The biggest area for improvement is with respect to rights of way (RoW). While a new policy was served up a few years ago, implementation has been patchy due to the divergences between federal and state level policies. The lack of fast access to RoW has constrained the pace of 5G deployments, not only in terms of new towers and small cells that would boost coverage but also in terms of the transport network where fiber connectivity is crucial for backhaul.

India’s telcos are targeting the enterprise as a key 5G monetization strategy

As the pace of 5G coverage gains momentum, India’s telco incumbents are prioritizing a focus on the enterprise as a key monetization strategy. For years, incumbent telcos have dabbled with fixed line connectivity services, MPLS networks, SD-WAN and even IoT. However, there are a number of major investment cycles that are already in play or about to kickstart. All of these investments will cater to the surging demand for digital services and applications.  

First, on the access front, 5G fixed wireless access (FWA) is being considered as a key access technology for connecting Indian enterprises. In terms of low hanging fruit, the large volume of small and medium enterprises (SMEs) in India are a key target segment for FWA. Currently, most do not have access to fiber broadband. Rather, they utilize 4G dongles and Mi-Fi devices or rely on cable internet connections. All of these can be upgraded to 5G FWA. Similarly, there is significant potential to use 5G FWA as a solution for wiring campus networks and industrial sites that can’t be serviced with fiber.

Second, the datacenter segment in India is booming today, as are investments in submarine cable capacity. Not only is the domestic market booming, with demand coming not only from urban India (usually associated with the major metro cities) but also from tier 2 and tier 3 cities and towns, as well. With expanding retail and ecommerce operations across the country, logistics networks are rapidly being added to cater to end-user demand for goods and services. However, in most cases, end-user data needs to stay within local borders. These regulations are driving investments in datacenter capacity. And telcos like Airtel Business are a major stakeholder with their Nxtra datacenter business growing rapidly with plans to expand beyond their current 120 locations across the country. Incumbent telcos are loathe to cede this space to the hyperscalers, which are also investing heavily in India.

Private wireless

Third, the market for private wireless networks is nascent but will see strong growth in the next few years. Mandala Insights projects this to be a significant market, reaching $240 million in total spend by 2027.

India will adopt a hybrid model for spectrum ownership and see the emergence of a number of deployment scenarios, with three primary options coming into focus. One, enterprises can opt for a managed service from a telco; two, enterprises can “lease” spectrum from a telco and enlist a systems integrator (SI) to build and manage the network for them; three, enterprises can apply for dedicated spectrum licenses from the government and then build the private network in-house or through an SI partner.

There will be stiff competition between incumbent telcos like Jio and Airtel offering private 5G as a managed service versus enterprises that opt for a managed service put together by an SI who “leases” spectrum from a telco, with BSNL already “working” with a number of SIs and other parties to lease its 4G spectrum to package together with a private network solution. 

The Indian telecoms market has seen its fair share of ups and downs, with plenty of controversy thrown into the mix like spicy masala added to a curry. However, there are palpable signs that the worst is behind the sector and 2023, with enabling policy and regulation, rapid 5G deployment progress as well as investments in digital infrastructure, will be a bellwether for a concerted phase of growth.

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