Jio, Vi, and Airtel are the only three PAN-India 4G operators in India right now. All the telcos have hundreds of millions of users in their subscriber base to whom they provide 4G network services. There are 2G users as well, but that’s a conversation for another day. Today, what I want to talk about is what if Jio, Vi, and Airtel don’t roll out 5G and just focus on 4G? Note that I very well know this isn’t going to happen. However, I couldn’t help but wonder, what if the telcos just went on with their usual 4G network services and didn’t care about 5G because of the steep spectrum price and the decision of the government to allow the enterprises to get airwaves directly in an administrative manner for captive private networks?
To be very honest, 5G doesn’t seem like the biggest deal-breaker for the telcos right now. From an investor perspective, the kind of expenditure that 5G would entail in 2022, factoring in spectrum price, among other things, doesn’t feel like a very solid option for Jio, Vi, or Airtel. Not to forget, Vi doesn't even have the capacity to make large investments for 5G in the first place. Expenditure is not the issue; RoI (return on investment) is!
But one thing’s proven for the telecom operators – revenues from 4G networks. They have already spent billions of dollars on setting up infrastructure, permissions, spectrum, and more for 4G, and it is also bringing them plenty of money. While 5G will open up a whole new revenue stream from the enterprise sector, are the telcos really desperate for it? Well, I would argue not, despite fully acknowledging the fact that all the private companies just want to make more money. So, what will happen if the telcos really don’t go for 5G? Let’s take a look at the negatives first.
The most obvious thing would be that consumers won’t get to see 5G anytime this year in any part of the nation. Second, enterprises would be very unhappy as not all of them might be looking to get the airwaves directly for setting up private 5G networks. Third, it would potentially affect the sales of 5G smartphones. Fourth, India will be left even further behind other nations in 5G network technology.
A delayed 5G rollout would mean that more users would start owning 5G smartphones over the long horizon and when telcos do launch 5G, it will be a more than ready market for them to monetise through retail consumers. Second, the industry and the government would get more time to sort through policies and the telcos would get sufficient room to set up a denser infrastructure.
Moreover, the telecom industry can upskill more people with knowledge about technologies such as 5G, AI, ML, and more which are going to be very relevant.
Again, it is unlikely that the telcos will miss out on 5G this year. But even if they do, I don’t think it is that big of an issue both from a consumer and an investor's point of view. A seamless 4G experience is still something Indian consumers crave for! Hopefully, that is sorted along with the 5G rollout.