Telecom Wars: Is The Road Ahead For The Sector A Bumpy One?

India’s telecom sector is gearing up to launch 5G as we near 2020. The sector stood at a tower site fiberisation of approximately 31 percent in the first half of 2019. This was far less than the required 70-80 percent to be able to implement 5G in the country.

Telecom companies such as Reliance Jio, Airtel and Vodafone-Idea are trying to lay out their fibre network to welcome the 5th generation mobile technology in due time. Jio currently leads the process.

The Mukesh Ambani-led operator began preparing itself for the big move earlier than the other two giants and thus currently has more 5G-ready fiberised towers than them.

The process requires huge investments flowing in the sector and present estimation by financial services group UBS reports this at $30 billion.

Airtel has already started making the effort to raise approximately $1 billion through overseas bonds. It has also launched various products such as Airtel Xstream and a set-top box to match the competition and utilise currently untapped markets.

Jio has also been making efforts to stay ahead in its game. Though it would not require as big an investment as the other two companies, it has already started making a move to attract more investment prospects. The company recently assured stakeholders that it will become debt-free by 2020 and also launched a set-top box Giga TV.

Meanwhile, Vodafone-Idea has been trying to fix the network issues ensuing post the merger.

The company has been trying to resolve network integration challenges such as the removal of duplicate sites and the logistical aspects that require their attention. This has not only resulted in a loss of customers but has also delayed the process of tower site fiberisation for the giant.

Even though the company currently has the highest holding in 1800 MHz, it is yet to be seen whether it will be able to handle all the data traffic.

With several investments expected in the sector in the coming months and the competition becoming steeper, telecom companies should witness several big moves in the coming time.―Authored by Gaurav Garg, Head of Research at CapitalVia Global Research – Investment Advisor for Money Control