If switching to 4G from 3G was all about rationalising capacity by Indian telecom operators, 5G’s clarion call is fiberisation -- and more fiberisation. Investment in fiberised backhaul infra, which provides unlimited capacity andhigher speeds, has to gain further traction, if 5G has to become reality.

But fiberisation is expensive; it comes on top of spectrum costs that are sky-high at current prices. To boot, telcos are saddled with a staggering debt of ~Rs 4.3 lakh crore as of March 2019. That is why India is set to witness sometectonic shifts in the fiberisation landscape and the birth of new business models among telcos and tower companies around the launch of 5G.

Consider this. 5G technology dictates fiberisation levels of over 70%, versus 25-30% levels at present. CRISIL estimates that if each player were to reach this level individually, Indian telcos may need investments of up to ~Rs 1lakh crore only in laying fibre networks over the next 2-3 years. Higher land cost and right of way approvals make fiberisation cost per km as high as ~Rs 1 crore per km in metros.

Then, there is also the spectrum purchase costs in the upcoming auctions to shell out. Already, the reserve price recommended by the Telecom Regulatory Authority of India (TRAI) for 5G spectrum bands is much higher than incountries like the United Kingdom or South Korea. How much money there is for investment is crucially linked to price-setting at the auctions.

So what are the feasible options?

Players could restrict 5G launch in the initial years to metros and select circle ‘A’s that show high data consumption appetite. Or, they could evolve business models for sharing fibre infrastructure.