5G infrastructure to cost Rs 3 lakh crore in next 4-5 yrs: ICRA

India has about 35% of its towers fiberized for 5G, and the backhaul infrastructure will cost a staggering Rs 3 lakh crore over the following 4 to 5 years.

The rollout of 5G network is accelerating among Indian carriers. In accordance with the rating agency ICRA's assessment, the nationwide rollout of 5G will require significant investment in fiberization due to the network intensification required for 5G. A significant 5G rollout demands the deployment of a lot of digital infrastructure, and the sector must invest in fiberization

According to the rating agency ICRA, India has about 35% of its towers fiberized for 5G, and the backhaul infrastructure will cost a staggering Rs 3 lakh crore over the following 4 to 5 years.

ICRA also mentioned that the average revenue per user (ARPU) levels and steady increase in telephony usage are two indicators of the telecom sector's ongoing healthy development in operating metrics.Over the past quarters, AGR for the industry is seen growing steadily. As per the report, ARPU has already surpassed Rs 170 in H1 and is predicted to reach Rs 180 by the end of FY, before increasing to over Rs 200 by FY2024.

However, regardless of the steady growth, the industry's debt levels are still very high and have gone up even more since the latest round of auctions ended. According to the rating agency, the sector is anticipated to end the year with a debt of approximately Rs 6.3 lakh crore as on March 31, 2023.

This occurs when carriers are attempting to raise tariffs in order to increase ARPU. Airtel has already raised the entry-level rates in nine circles while Vodafone Idea is yet to follow suit.

Ankit Jain, VP and Sector Head, Corporate Ratings, ICRA said, "While the rollouts have started and customers are being upgraded to the 5G network, the same is being done at no additional costs as 5G-specific plans have not been launched yet. Moreover, 5G deployment will entail densification of network and close placement of radio antennas, with possible collocation on street furniture."

"As several use cases are under development, it will take some time for 5G to reach an adequate level of penetration. To begin with, it will be more focused towards enterprise-based use cases. Thus, unlike 4G, ICRA expects the 5G rollout to be more phased out and pockets specific," Jain further elaborated.

A tariff increase becomes necessary for the ARPU to increase, which in turn contributes to the telcos by reducing their CAPEX costs associated with deploying the densified infrastructure necessary for widespread large-scale 5G services.