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Reports in the press suggest that India’s telecoms market is at near breaking point, with operators simply unable to meet the exorbitant investment costs of 5G
India’s mobile network operators may be forced to delay the launch of 5G by up to 5 years, as they grapple with brutally competitive market conditions, sky high spectrum prices and a regulatory landscape littered with fines and charges.
A report in The Economic Times of India quoted Rajan S Mathews, director general of the Cellular Operators Association of India (COAI) as saying that operators could not cope with launching 5G under the current market conditions.
“We will push out 5G for at least five years. That’s the operator perspective,” he told journalists from the Economic Times of India.
“Pricing originally started off as a problem for the industry. With the Rs 492 crore (4.92 billion Indian Rupees, $68 million) for 1 MHz, most operators said it was not a viable proposition given the debt and international prices,” he added.
The COAI counts Bharti Airtel, Vodafone Idea and Reliance Jio among its members, in addition to Huawei, Ericsson, Cisco and Ciena.
This year, senior executives from all three of the country’s mobile network operators have implored the Indian government to cut costs as operators grapple with the capital demands of 5G investment. Speaking earlier this year at an event in Delhi, Bharti Airtel’s CEO, Gopal Vittal said that the cost of doing business for Indian telcos had to come down.
“The cost of doing business here has to come down. The spectrum usage charges, the taxes, the litigation that the industry is subjected to, the USO fund that is just sitting with the government unused, are all constraining the industry,” he said.
“If you look at the investment that we are making for 4G, for every 100 rupees that we earn, we spend 34 rupees on capex. For most other companies in this industry, that figure would be closer to 16 or 17 rupees.
“An additional 31 rupees goes to the government for tax. This is a broken situation and we need to fix this,” he added.
Last month, the CEO of Vodafone Group, Nick Read called on the Indian government to deliver a significant relief package for Vodafone Idea or risk losing the JV all together – a call that the government has largely ignored up to this point.
"I’m very clear about what the requirements are for us to be a sustainable business going forward. So, when I use the word critical, I mean critical!"
"To be very clear: if you don’t get the remedies that you are looking for and the situation is critical in terms of [existing as] a going concern," he said.
While operators have banded together in recent months to kill off their cheaper tariffs in an attempt to boost ARPU, the COAI statement this week shows the sheer scale of the problem operators are facing.
