Greater fiberisation 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, warns a report from CRISIL.
The estimate excludes the cost of acquiring the spectrum, which has been kept at a high price by the government, CRISIL said on Monday in a note.
At present, the fiberisation levels for the industry stand at under 30 per cent, compared with 70 per cent, which is dictated by the 5G technology, it noted. "If each player were to reach this level individually, telcos may need investments of up to Rs 1 lakh crore only in laying fibre networks over the next two-three years," the CRISIL report said.
The higher land cost and 'right of way' approvals make fiberisation cost as high as Rs 1 crore per km in metros, it said, adding the telcos will initially restrict 5G to metro areas 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, the CRISIL report said, adding the domestic telcos, which are already saddled with debt of Rs 4.3 lakh crore, will have to evolve newer operational models to sustain.
Various business models are in vogue to meet high bandwidth demand globally such as hiving off assets, diversification of businesses and sharing them with third parties, CRISIL said.
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Hiving off fibre and tower assets into separate entities is one of the prominent business models, it said, adding Bharti Airtel and Reliance Jio have done so to reduce capex, de-leverage balance sheets and to get higher valuation of each entity.
The CRISIL 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 diversification and infra sharing, which can be a win-win for all.
