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Indian telcos may need to invest Rs 1 lakh crore on optical fibre in 3 years for 5G: Crisil

25 Jun 2019 Evaluate

Crisil in its latest report has said that greater spread of optical fibre is necessary before 5G becomes a reality and the already stretched telcos will have to invest at least Rs 1 lakh crore in laying fibre networks in the next three years. The estimate excludes the cost of acquiring the spectrum, which has been kept at a high price by the government.

The report further stated that the higher land cost and right of way approvals make fiberisation cost as high as Rs 1 crore per km in metros. The telcos will restrict 5G to metro areas initially where there is a high appetite for data consumption. The cost of acquiring spectrum has been set much higher than that of Britain and South Korea.  Moreover, the report highlighted that the domestic telcos, which are already saddled with debt of Rs 4.3 lakh crore, will have to evolve newer operational models to sustain. Currently, the fiberisation levels for the industry stand at under 30%, compared to 70% which is dictated by the 5G technology.

Besides, the report mentioned that various business models are in vogue to meet high bandwidth demand globally such as hiving-off of assets, diversification of businesses, and sharing them with third-parties. Hiving off fibre and tower assets into a separate entities is one of the prominent business models, adding Bharti Airtel and Reliance Jio have done so to reduce capex, deleverage balance sheets, and to get higher valuation of each entity. The report also noted that large incumbents are in talks to form joint ventures for sharing fibre and also to reduce capex. The other model may be a diversification and infra sharing, which can be a win-win for all.

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