The expanding fifth-generation or 5G network coverage of Reliance Jio and Bharti Airtel could potentially accelerate the churn of third-ranked Vodafone Idea\u2019s high-end postpaid subscribers to the top two telcos, according to brokerage firm BoFA Securities.<\/p>\n
\u201cBoth Bharti and Jio have been able to increase their market shares at the expense of VIL in last few years. We expect the loss of market share at VIL to get more pronounced going ahead as 5G coverage differential becomes clear. In particular, we think the high end postpaid users of VIL could be targeted by its competitors,\u201d BoFA said in a research note Tuesday.<\/p>\n
\u201cWhile till date, we have not seen much churn there as all telcos were on 4G but a differential between 5G coverage may entice users to migrate,\u201d it said.<\/p>\n
In the Q1FY24 earnings call, Reliance Industries Limited (RIL)\u2019s management stated that they are ahead of the committed timeline and that more than 90% of the census towns are already covered by Jio’s 5G signal. Around 115,000 5G sites are already deployed in pan-India, which roughly translates to nearly 700,000 5G cells.<\/p>\n
With a $25 billion capex commitment, Jio is aiming to have a pan-India rollout by December 2023 since it started deployment around October 2022.<\/p>\n
As per BoFA, Jio\u2019s $25 billion capex commitment comprises its $11 billion purchase of 5G airwaves; $8 billion investment towards upgrading the 4G network to 5G; and the remaining $6 billion investment towards FWA (fixed wireless access) or JioFiber.<\/p>\n
\u201cIf Jio is looking to deploy MIMO on its 200K 5G sites then it would likely cost $4 bn capex. Furthermore, Jio would also invest in fiber, larger towers, in-building coverage etc. On FWA, we estimate c. $6 bn FWA investment is likely to have immediate tangible cashflow,\u201d the brokerage said. The brokerage expects FWA capex to increase in synchronisation with the number of users Jio is gaining.<\/p>\n
\u201cFixed wireless access is an area where Jio appears to be focused in terms of gaining subscribers,\u201d BoFA said, observing that the rollout of Jio AirFiber is targeted more in tier 2\/3 cities where there is no return on investment (RoI) on fiber investment but consumer demand exists for quality fixed broadband service.<\/p>\n
\u201cWe think Jio will start this service on 3.5 GHz and would add 26 GHz overlay a year down the line. This would provide adequate capacity. Also, as the 5G rollout is largely happening, the incremental EBITDA margins on this service could be 60%+ as it would be leveraging the existing network,\u201d BoFA said.<\/p>\n
The brokerage estimates the addressable market at 320 million households in India, of which, around 20-30 million would eventually be catered by fixed broadband while the next 50 million could likely be catered using FWA, subject to optimal ARPU and CPE cost.<\/p>\n
It further pointed out that uncertainty surrounding FWA exists on the affordability quotient as the ability of 40-50 million households that would be able to pay Rs 300-400 for home broadband apart from their mobile spends is not known.<\/p>\n
\u201cJio has seen users pay in tier 3\/4 cities for 4G and hence rolled out 4G ahead of competition there. Bharti is now rolling 4G in these areas. Similarly, on FWA now, Jio sees the potential for these users to pay,\u201d BoFA said.<\/p>\n
The brokerage noted that both Jio and Airtel have varying views on the price of the consumer premises equipment (CPE). While Airtel has stated that broadband wireless access (BWA) CPEs are priced very high at $170-$180, Jio on the other hand thinks it would be able to bring it down to below $120 as it is working with Qualcomm as a partner.<\/p>\n
\u201cWe also think that Jio could also subsidize this device \u2013 further bringing down the price for this,\u201d BoFA said.<\/p>\n","protected":false},"excerpt":{"rendered":"
The expanding fifth-generation or 5G network coverage of Reliance Jio and Bharti Airtel could potentially accelerate the churn of third-ranked Vodafone Idea\u2019s high-end postpaid subscribers to the top two telcos, according to brokerage firm BoFA Securities. \u201cBoth Bharti and Jio have been able to increase their market shares at the expense of VIL in last few years. We expect the loss of market share at VIL to get more pronounced going ahead as 5G coverage differential becomes clear. In particular, we think the high end postpaid users of VIL could be targeted by its competitors,\u201d BoFA said in a research […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-800367","post","type-post","status-publish","format-standard","hentry","category-telecom"],"acf":[],"_links":{"self":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/800367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/comments?post=800367"}],"version-history":[{"count":0,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/800367\/revisions"}],"wp:attachment":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/media?parent=800367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/categories?post=800367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/tags?post=800367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}