Reliance Jio, Airtel to prioritise 4G upgrades over 5G expansion: Report

India’s top telecom operators, Reliance Jio and Bharti Airtel, are reportedly adopting a cautious strategy in expanding their 5G networks. According to a report by The Economic Times, both companies are slowing down their 5G rollout due to low capacity utilisation and the lack of immediate monetisation opportunities. Instead, they are focusing on migrating existing 4G users to the more expensive 5G services.

Both Jio and Airtel have seen limited use of their 5G networks so far. As a result, they are prioritising upgrading their 4G customer base to 5G. Equipment suppliers for Jio, including Nokia and Ericsson, have indicated that the company will delay further investment in 5G infrastructure until network usage increases. “Jio’s focus is to migrate its 4G users to 5G, but this won’t happen overnight... the next round of POs (purchase orders) for 5G gear could be some quarters away as network utilisation needs to rise sharply,” one source was cited in the report.

Industry experts believe that Jio will likely accelerate its 5G expansion when competition with Airtel intensifies. However, at present, Jio’s larger 5G user base and its excess network capacity reduce the need for immediate expansion. Jio currently has over 130 million 5G users, compared to Airtel’s 90 million.

Jio has also noted that its 5G network now covers over 90 per cent of India’s population. According to the report, the company’s senior management has said that capital expenditure (capex) on its 5G rollout has peaked and will decline in the coming years, as its nationwide rollout is largely complete and there is currently surplus capacity.

As demand for Jio’s fixed wireless access (FWA) service, Jio AirFiber, grows, the company is expected to invest further in its 5G network to meet increased demand. However, at the moment, network utilisation remains low, reportedly around 15 per cent. Airtel, meanwhile, is also focusing on improving its 4G network to attract feature phone users to smartphones.

Both telcos are taking a "need-based" approach to expanding their 5G services, as they wait for stronger monetisation opportunities and compelling use cases to emerge.