Indian telecom operators, who are rolling out 5G at a rapid pace, could soon see the costs of 5G gear that they import going up. Major vendors such as Nokia and Ericsson are supplying the telcos with 5G gear. Because of the ongoing Israel conflict, the rupee could fall against the US dollar. As of now, no major fall has happened. However, in case the conflict becomes wider and longer, then there's a good chance that the Indian rupee may fall against the US dollar.
According to an ET report, this could mean that the 5G network gear costs for the telcos could rise by Rs 2000-2500 crore. It would not only increase the capex projections for the telcos but would also likely slow down the 5G rollout. The report mentioned that India's rupee could witness up to a 3-4% dip against the US dollar. Such a scenario would also increase the foreign debt servicing costs for the telcos and directly impact their profitability.
A major part of the telecom gear in the mobile networks in India is imported from players such as Nokia, Ericsson and Samsung. This means that the telcos would be wary of their 5G rollout costs in the near future. For now, both Airtel and Jio are going at a decent pace and seem to be on track to complete their 5G rollout in their target time.
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Vodafone Idea (Vi) is yet to launch 5G and thus there will be no impact on the telco's business even if the cost of 5G gear goes up in the near future. It is worth noting that Reliance Jio recently raised a total of $4 billion USD in offshore loans to fund 5G gear purchases from Nokia and Ericsson. Thus, any major depreciation of rupee against the US dollar would directly impact the telco's overall costs and profitability.