5G services by 2020? Not in India, says EY analyst

india 5G
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While some cellcos race to be the first on their block to roll out 5G in some form or another by 2020 or earlier, markets like India are unlikely to see commercial launches until at least 2022, according to EY.

Speaking during an ET Telecom webinar, EY Global Telecommunications Leader Prashant Singhal said that 5G is going to be a hard slog for India’s mobile operators thanks to key challenges such as high capex, debt and a shortage of fiber backhaul.

According to ET Telecom, Singhal pointed out that initial 5G rollouts will be capex-intensive, which poses a problem for Indian cellcos already struggling to keep up with current capex demands, especially as they deal with declining revenues. Singhal estimated India’s mobile sector will have to invest between $60 billion and $70 billion for 5G.

Another problem is that India is still in the fledgling stage with 4G. EY says there were just over 160 million 4G subscribers in India as of March 2017 – which works out to around 12% penetration. EY expects that to reach 40% (520 million) by 2022.

Then there’s fiber backhaul, which EY’s Singhal says is a pre-requisite for 5G – however, only around 20% of cellular towers in India are connected by fiber. The rest are connected mainly by microwave.

All of which means Indian operators making plans for 5G have their work cut out for them, Singhal said:

“For 5G to proliferate in India, operators need to overcome existing financial stress, existing business models need to be revisited, regulatory issues need to be dealt with, entire spectrum licencing regime needs to be relooked and device ecosystem needs to evolve,” summed up Singhal in the webinar.

Last month, India’s telecoms ministry promised to do its part, with telecom minister Manoj Sinha saying that the government’s next telecom policy will take into account future trends such as IoT, AI, smart cities, digital transformation and 5G, according to ET Telecom:

“5G will speed up the digital transformation in a number of industries, enabling new use cases in areas such as IoT (Internet of Things), automation, transport and big data,” he added.

The government says it is already laying the groundwork for 5G by asking independent regulator Trai to come up with a price for the 3400-3600 MHz bands.

However, given India’s history of spectrum auction prices, it remains to be seen if Trai prices 5G-related bands at levels cellcos can actually afford. Even if they can, the cost of spectrum alone could contribute heavily to the capex problem outlined by EY.

In any case, Minister Sinha also predicted that India could be leading the world alongside North America in 5G subscription numbers by 2022. He may have been assuming that Indian operators will be launching 5G by 2020 like operators in other markets are planning to do. If EY’s calculations are right, that’s going to be a very tall order.

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