5G: A game changer or just another fad?
India is the second largest telecommunications market in the world and has a subscriber base of 1.16 billion. Going forward, the Indian mobile economy is going to witness a rapid growth and contribute largely towards the GDP, as per GSM Association (GSMA) along with Boston Consulting Group (BCG).
Will 5G become a game changer? Or will it be just another upgrade?
As per Ericsson, 5G business services would provide USD 17 billion revenue opportunity to the telecom companies by the year 2030.
With the spectrum auction underway – the top companies in the sector including Bharti Airtel, Reliance Jio and Vodafone Idea are eager to install broadband networks that would be 10 times faster than the present 4G technology.
The main revenue driver would be enterprise services which includes captive private networks for varied industries across India.
It will give rise to usage and adoption by new age businesses thus, increasing the revenues opportunities for the operators. Companies engaged in virtual reality, blockchain, AI enabled tech will benefit with the launch of 5G.
Analysts believe that adoption of 5G in India will be crucial as it would create further avenues in terms of added growth for peripheral industries.
Will there be new entrants in the telecom sector or will the sector consolidate further?
Post launching of the 5G technology, companies in the telecom sector would notice enhanced revenue along with steady cash flows. It seems that they would be able to manage the annual payouts for the spectrum without much stress. With this, it is being predicted that operators would be able to achieve decent profitability figures, thus, prompting greater innovation in the sector.
Recently, Adani Group announced that it is foraying into the telecom industry. The company plans to use the 5G technology for its data center and the app which they are developing in-house. The app will support businesses ranging from electricity distribution to the airports, together with gas retailing to ports.
Industry experts suggest that companies would like to determine the impact of 5G on industrial units before taking a decision for entering into the sector. Since the profitability margins are yet to be estimated, business houses would like to wait and watch – before jumping into the bandwagon.
Is it a good time to enter India, especially in the telecom sector?
Telecom operators became the life-line for companies and users who were locked in the house during the pandemic. Companies enabling work-from-home significantly trusted the operators to provide seamless connectivity for ensuring business continuity. The condition prompted companies to adopt technology at a much faster pace, which would have been a difficult task in normal circumstances.
Additionally, stimulus packages were announced by the government to re-establish state-owned MTNL and BSNL – INR 1.6 Lakh crore. In the future, it needs to be seen how the private operators will be able to compete with government-owned companies – given their reachability in the interior parts of the country.
If companies would like to enter the country, this is the right time. They will have to evaluate their positioning with Indian partners, as ROI in the sector would be realized only in the long-term.
Given the rise in the content consumption and data usage, companies wanting to enter India can benefit with higher profitability, but only if they perform consistently in the sector.