Auction over, but rollout faces multiple challenges

With the closure of the 5G telecom auctions, India has joined a select list of 70 countries with 5G technology offerings.

The government garnered Rs 1.5 lakh crore from the sale of spectrum, with four players bidding actively. At least Rs 13,000 crore of the cash flow is likely this fiscal.

From the players’ perspective, subscriber upgrade to 5G and aggressive market share gains will be key to success.

However, 5G rollout faces a host of challenges — among others, a lack of use cases, costly handsets, and potential rollout at a premium that will limit 5G revenue to single digit share of total revenue by fiscal 2026

Additionally, 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, with a potential 5-9% increase due to rupee depreciation this fiscal alone. Zero spectrum usage charge (SUC) and relaxation of upfront payment, though, provide some relief here.

As things stand, enterprise readiness is on a sticky wicket at present, though manufacturing appears to be the most suitable and ready for 5G adoption.