Indian telcos need to invest ₹1 lakh crore in fibre networks : Crisil

Our Bureau Mumbai | Updated on June 24, 2019 Published on June 24, 2019

With 5G technology dictating more than 70 per cent fiberisation levels, Indian telecom companies may need investments of up to ₹1 lakh crore just for laying fibre networks over the next 2-3 years, according to a report by Crisil.

Higher land cost and Right of Way (RoW) approvals make fiberisation cost per km as high as ₹1 crore per km in metros, according to the report ‘5G is here, but where’s the fibre?

It added that “fiberisation” is 5G’s clarion call, requiring 70 per cent fiberisation levels compared with 25-30 per cent at present. Investment in fiberised backhaul infrastructure, which provides unlimited capacity and higher speeds, has to gain further traction, if 5G has to become reality, it added.

Fiberisation is expensive and it comes on top of spectrum costs that are “sky-high” at current prices. To boot, telcos are saddled with a staggering debt of about ₹4.3-lakh crore as of March 2019. India is set to witness some tectonic shifts in the fiberisation landscape and the birth of new business models among telcos and tower companies around the launch of 5G.

Newer models

Globally, various business models are in vogue to meet high bandwidth demand, such as hiving off of assets, diversification of businesses and sharing them with the third parties.

Hiving off of fibre (and tower) assets into a separate entity is one of the prominent business models. It imparts flexibility to the hived off entity for providing services to third parties in the industry, and thus enables the company to pursue topline growth opportunities.

It also reduces capex requirements, de-leverages the balance sheet and leads to higher valuation of entities as cash flows get predictable.

Diversification of business

Tower companies are also looking to diversify their business from being merely pure play tower service providers to managed service providers and into areas such as in-building solution (IBS) small cells, fibre backhaul and others.

Core revenue streams (tower rentals) of tower companies have been hit by massive tenancy losses, led by recent structural changes in the telecom industry.

The reserve price recommended by the Telecom Regulatory Authority of India (TRAI) for 5G spectrum is much higher than in countries like the UK or South Korea. Players could restrict 5G launch in the initial years to metros and select A circles with high data consumption appetite, it added.

Published on June 24, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.