Thursday, October 6, 2022

5G: Industry requires Rs 2.5 L cr capex

The telecom industry will need at least Rs 1.5-2.5 lakh crore investment in the next two-three years towards infrastructure development to facilitate meaningful roll out of 5G services given that India’s fiber layout is much below the required levels.
“The low level of fiberisation at present will necessitate network capex of Rs 1.5-2.5 lakh crore in the next 2-3 years. However, with fiberisation at 35.11% in India as of June 2022, more than 3 lakh km has to be covered at the pan-India level between fiscal 2023 and 2025,” according to a report by Crisil Research.
The 5G network infrastructure will need to support up to 10 times more bandwidth than what 4G infrastructure currently supports, said experts. In India, currently only 35% of total towers are fiberised – or connected through optic fiber – against an ideal requirement of 70% for the launch of 5G services. Besides, investments in network densification through provisioning of fiber, small cells and active infrastructure sharing are the other initiatives which need to be taken at the earliest, say industry experts.
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Compared to India, South Korea has fiberized 65-70% of its sites, while in the US, Japan and China, the level of fiberisation is 80-90%, according to information by Digital Infrastructure Providers Association (DIPA).
“The government should consider enhancing the scope of infrastructure providers (IPs-1) registration by permitting them to share active infrastructure as enshrined in NDCP-2018 which will ensure roll-out of 5G services at a faster pace,” says TR Dua, Director General, DIPA.
A major reason for the slow pace of fiberisation is the right of way (RoW) cost, which ranges from several lakh to a few crore across circles.
While the central government has taken efforts to maintain a uniform RoW cost across circles, the high disparity has been a huge roadblock to reaching the fiberisation target, Crisil report said.
“5G requires huge infrastructure and investment from the service provider. We are still at the beginning stage of implementation. However, despite the cumbersome nature of rollout, excitement about 5G has picked up well and we are taking steps in the right direction,” KG Purushothaman, partner and telecom sector leader at KPMG in India, said.
According to a study, network deployment investment is reduced by laying optic fiber cable along railway lines, power transmission grids and pipelines. Estimates suggest that sharing antenna sites can save operators up to 40% on both capital expenditure and 5G deployment, Dua said.
The 5G handset penetration also remains low in India at 15-20%. The shortage in semiconductor chips has resulted in an increase in price of 5G handsets which could limit robust penetration this fiscal, industry executives said.