Jio ahead of competition in preparedness for 5G FWA deployment: Emkay

Reliance Jio is relatively ahead of peers in terms of preparing for 5G fixed wireless access (FWA) due to the wider coverage of its fifth-generation network, wider holdings of spectrum bands including 700MHz, and in-house FWA technology following its acquisition of Mimosa, said Emkay Global in a research note.

The brokerage, while citing Jio’s plans to invest $25 billion in 5G, including $5-6 billion for FWA, said it indicates the telecom operator’s commitment to new technology.

But Emkay expects Sunil Mittal-led Bharti Airtel to catch up with Jio in FWA given that it is also expanding its 5G coverage at a rapid pace by adding 35-40 cities daily. It said that Airtel can refarm its 900MHz band and deploy it to counter Jio’s 700MHz band.

The brokerage said that Airtel can also use the E-band microwave on 5G tower for backhauling, as well as, leverage its local cable operator (LCO) model for adding homes.

Emkay said that FWA will bring about the “next wave of disruption” for both internet service providers (ISPs) and cable/DTH operators, adding that it will be important for 5G monetisation.

FWA technology uses spectrum to provide fixed broadband services, compared to the use of fibre cable in wireline broadband. FWA will be relevant for homes, small offices, and small & medium businesses (SMBs).

But the brokerage said the high cost of consumer premises equipment (CPE) at $170/unit (Rs 14,000) remains a deterrent to the uptake of FWA.

“Assuming payback period of 36 months for a CPE and 50% contribution margin, telcos may require ARPU of Rs780/month. However, if CPE cost reduces to USD150/125/100, ARPU requirement can reduce to Rs685/570/460. With CPE cost at USD100, ARPU requirement of Rs460/month will still be at a more-than-double cost of the lowest FTTH plan (Rs198/month),” said Emkay.

On the other hand, if priced reasonably, FWA will allow telcos to tap into homes which will present upselling opportunities such as for content, and the Internet of Things (IoT), among others.

The brokerage firm expects that an ARPU between Rs460-780/month and the 30 million covered homes offer Rs 166-281 billion per annum prospects for FWA.

“In this range, we favor the FWA opportunity of Rs 205 bn pa (USD2.5 bn pa) with ARPU of Rs 570 and coverage of 30mn homes. FWA can also address the large greenfield market in SMBs (50mn) and generate Rs180bnpa revenue via capturing 10% of the available market, assuming ARPU of Rs3,000/mth. FWA could also make inroads into the DTH (Rs157bn) and Cable (Rs181bn) markets,” said Emkay.