Reliance Jio and Bharti Airtel, are taking a cautious approach to building their 5G networks. With low-capacity utilization and monetization issues, both businesses are focusing on upgrading their 4G consumers to the more expensive 5G service, putting off larger 5G infrastructure investments. As per industry sources, Reliance Jio’s present 5G network utilization is around 15 per cent, whereas Airtel’s priority remains on expanding its 4G network. Both telcos are pursuing a ‘need-based’ expansion approach rather than aggressive statewide 5G development, as compelling use cases for the next-generation technology have yet to materialize significantly.
The companies have introduced 5G networks that currently serve a huge section of the Indian population, with Jio’s network apparently spanning more than 90 per cent of the country. However, this coverage has not resulted in widespread adoption, and both telecoms are seeing limited monetization from the new technology. For the time being, both businesses are focusing on transferring their existing 4G customers to 5G technology. The goal is to increase the number of consumers who pay for the more expensive 5G service, but this transition will take time. Ericsson, Jio’s primary 5G equipment providers, have also stated that future investments in 5G infrastructure will be dependent on greater network utilization.
Jio, which now has the largest 5G user base of the two operators, is expected to speed its development only as competition from Airtel heats up. For the time being, Jio can postpone further expenditure due to surplus capacity in its 5G network. As per sources, the next round of 5G purchase orders may be postponed for several quarters unless demand increases significantly. Io’s senior management has stated that the company’s capital expenditure (capex) on 5G has peaked and is projected to fall in the coming years.
This reduction comes after the completion of its state-wide 5G deployment and surplus capacity in its existing network. However, as demand for Jio’s 5G-based fixed wireless access (FWA) service, Jio AirFiber, increases, the business may need to invest more to meet rising data demands. Jio’s strategy, for the time being, focuses on exploiting its existing infrastructure while waiting for increasing demand to fuel the next wave of expansion. Industry experts believe that this cautious attitude will change when more competitive pressure from Airtel and other telecom operators emerges, necessitating rapid network development and increased service offerings.
