INSUBCONTINENT EXCLUSIVE:
After racking up $59 billion of net debt to survive a brutal war in the world's second-biggest phone-services market, some of country's
billionaires are bracing for more as their next battle looms: 5G.India seeks to raise $84 billion this year from a sale of airwaves -- most
of it for the latest technology tipped to revolutionize connectivity -- posing a conundrum for the carriers controlled by tycoons including
Mukesh Ambani, Asia's wealthiest man
Investment would mean more borrowings, but the reward could be revenue streams never seen before.Operators may soon decide how much more
pain they can endure for a high-speed wireless network that can offer better user experience in streaming, gaming and entertainment in a
With applications ranging from manufacturing to education and health care, 5G could be the catalyst for India's digital economy that has
the potential to reach $1 trillion by 2025, according to a report by Deloitte.'Competitive Parity'"Any player missing on the 5G service
offering is likely to see erosion of market share," said Alok Shende, a Mumbai-based principal analyst for telecom at Ascentius Insights
"There's all the more case for maintaining competitive parity to remain in the game
Offering a forward path to customers is important."Bharti Airtel and Vodafone Idea, the two biggest carriers, didn't respond to request for
augmented reality, virtual reality, connected cars, autonomous drones, smart homes and cities, the real promise for a country like India
lies in rural areas, said Prashant Singhal, global head of telecommunications at Ernst - Young.The technology could address some of the
basic challenges due to lack of infrastructure in health care and education
For instance, an experienced surgeon in a major urban hospital can advise an in-theater doctor in a small town to perform a surgery over a
real-time 5G connection or a holographic image of a teacher could be beamed to a classroom in a village, he said.Most of Asia's largest
wireless carriers are in the process testing 5G networks, with plans to introduce them commercially in 2020.World's FirstSouth Korea's
SK Telecom unveiled its 5G network for public use in April, calling it the world's first such full commercial roll out
China issued 5G licenses to its three main operators earlier this month, raising the prospect of services starting as early as this year
India plans to deploy its own next year.The immediate challenge in India would be the investment needed for the network, which the Telecom
Regulatory Authority of India estimates could be as much as $70 billion
That amount will further dent the finances of operators that are in the midst of efforts to pare debt piled over the past decade."Spectrum
pricing is too expensive in India and the telecom companies will have further stress in their balance sheets if they wish to participate in
the upcoming auction," Rajan Mathews, chief of Cellular Operators Association of India, the industry group representing the carriers, said
"But they have an option of buying at a later date."Deferred PurchaseIn India, successive governments running chronic budget deficits have
relied on airwave auctions to replenish their coffers
If authorities don't garner enough demand for the airwaves, they usually cut the price by as much as 40% in the subsequent round, according
to Deepti Chaturvedi, an analyst at CLSA India Pvt
The preferred option may be to defer the purchase, she wrote in a note earlier this month.Despite a market with more than 1.1 billion
subscribers, competition has driven data tariffs to less than a dollar for 1 GB -- the cheapest in the world
The monthly average revenue per mobile user is also among the lowest, at about $2, compared with about $8 in China and at least $40 in the
As a result, many incumbents retreated or merged
Reliance Communications, run by Ambani's younger brother, is now facing bankruptcy
The consolidation has left three non-state carriers still standing, from about 10 four years ago: Jio, Bharti Airtel and Vodafone
Mittal's Bharti Airtel has run up a net debt of about $16 billion, while shoring up profits with one-time gains for at least four quarters
in a row.Vodafone Idea, country's largest carrier by users after Vodafone Group Plc's local unit merged with tycoon Kumar Mangalam
Birla's Idea Cellular, has reported losses in every quarter since the deal was announced in 2017
Both Bharti Airtel and Vodafone Idea top the list of Asian peers with highest borrowings, according to data compiled by Bloomberg.However,
unlisted Jio thrived, supported by the deep pockets of Mr Ambani's energy-to-retail conglomerate that has spent more than $36 billion to
But the group's net debt of almost $28 billion is also backed by cash and equivalents of $11.3 billion
In January, Mr Ambani, said in a speech that his network is "fully 5G ready," signaling spending will be relatively less.Globally, 5G
spectrum auctions have witnessed "robust" participation, said Ernst - Young's Singhal
Germany raised 6.55 billion euros ($7.3 billion) this month, more than the government's highest estimate of 5 billion euros, while Italy
got $7.6 billion last year, more than twice what authorities expected
If that trend is any indication, India's auction may well turn out to be a success, given the growing demand for data."The prognosis for
5G in India is positive given the growing appetite for data, increasing digital transformation and the need to quickly adopt new
technologies," said Singhal
"It has the potential to transform lives and play a key role in socio-economic development."
