Reliance Jio and Bharti Airtel, India’s leading telecom operators, are reportedly taking a cautious approach to expanding their 5G networks. According to a report in Economic Times, both Reliance Jio and Airtel are going slow on its 5G network expansion with capacity utilisation low and monetisation still some time away, prompting them to sharpen focus on upgrading 4G users to the pricier next-gen service.
The companies have so far seen limited capacity utilisation and monetization opportunities. As a result, they are now prioritising the migration of their existing 4G customers to the pricier 5G service.
Reliance Jio and Airtel going for “need-based expansion”
According to sources familiar with the matter, Jio’s 5G network utilisation is currently around 15%, while Airtel is also focusing on ramping up its 4G network to attract remaining feature phone users to smartphones. Both telcos are only expanding their 5G operations on a need-basis due to the lack of compelling use cases that can drive significant monetization.
Jio’s 5G equipment suppliers, Nokia and Ericsson, have indicated that further investments in 5G infrastructure will depend on increased network utilisation. The company’s next round of purchase orders for 5G gear is expected to be delayed until there is a substantial rise in demand. “Jio’s focus is to migrate its 4G users to 5G, but this won’t happen overnight… the next round of POs (purchase orders) for 5G gear could be some quarters away as network utilisation needs to rise sharply,” one of the people cited told ET.
Industry experts believe that Jio’s 5G network expansion will accelerate once it faces more competition from Airtel. However, for now, Jio’s larger 5G user base and the excess capacity in its network are limiting the need for immediate expansion.
While Jio’s 5G network covers over 90% of India’s population, the company’s senior management has stated that its capital expenditure (capex) has reached a peak and is expected to decline significantly in the coming years. This is due to the completion of its nationwide 5G rollout and the current excess capacity in its network.
As demand for Jio’s 5G-based fixed wireless access (FWA) service, Jio AirFiber, continues to grow, it is likely that the company will need to invest more in its 5G network to meet the increasing demand.
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