According to the US-based venture capital firm Spark Capital, telecom market leader Reliance Jio will probably spend Rs 800 billion, or 40% of its planned Rs 2 trillion 5G network Capex, to roll out 700MHz and 3.5GHz radio across 200,000 and 300,000 towers, respectively.
The Standalone (SA) mode requires upgrading the core/transport, estimated to cost Rs. 250 billion (around 13%). Cash flow is spread out over 20 years even though spectrum accounts for 43% (about Rs 0.9 trillion).
Jio, unlike its competitor Bharti Airtel, has opted to build its 5G network in standalone mode rather than non-standalone (NSA), citing ecosystem preparedness.
Jio, controlled by billionaire Mukesh Ambani, paid Rs 88, 078 crores for the biggest quantity of spectrum, 24,740 MHz across the 700 MHz, 800 MHz, 1800 MHz, 3300 MHZ, and 26 GHz bands, in India’s first 5G spectrum sale.
While Vodafone Idea purchased 6,228 MHz of airways spanning 1800 MHz, 2100 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands for Rs 18,799 crore, Airtel, India’s second-largest telecom, purchased 19,867 MHz of spectrum across 900 MHz, 1800 MHz, 2100 MHz, and 3300 MHz bands.
For Rs 212 crore, the 26 GHz band’s 400 MHz was purchased by newcomer Adani Data Networks, mostly for captive use.
While Airtel and Jio have solidified their plans to launch the first phase of the 5G network across India beginning in early October, Vodafone Idea has yet to get new loans and complete its contracts for the purchase of 5G network equipment.
By pricing 5G tariffs at a 20% premium to 4G tariffs, Jio is aimed to deliver a 5G subscriber base of 12/21 million users and a blended average revenue per user (ARPU) of Rs 188/Rs 208 in FY24E/FY25E. This will lead in revenue growth of 10%/17% in FY24E/25E and an increase in adjusted EBITDA margin from 34% in FY22 to 52% in FY25E, according to Spark Capital.
Due to the launch of 5G by FY25E, Jio’s network expenses are also anticipated to grow by Rs 33 billion annually, or 13%.