According to a research note by Bank of America (BoFA) Securities, Reliance Jio and Bharti Airtel’s 5G expansion could possibly accelerate the churn of Vodafone Idea Limited’s (Vi) high-end postpaid subscribers to the two companies. This could be led by the differential in 5G coverage.
Reliance Industries Limited stated that they are ahead of the committed timeline in the first quarter of the 2024 earnings call, adding that more than 90 per cent of the census towns already had Jio’s 5G network. Around 115,000 5G sites have been deployed pan-India, which translates to roughly 700,000 5G cells. BoFA stated that Jio’s $25 billion capex commitment consists of its $11 billion purchase of 5G airwaves, $8 billion investment towards upgrading the 4G network to 5G and $6 billion investment in fixed wireless access (FWA) or JioFiber. Jio seems to be gaining subscribers in terms of FWA in an area, said the investment bank, observing the rollout of Jio AirFiber to be targeted more in tier 2 and 3 cities where the return on investment (RoI) is nil on fibre investment but still has strong consumer demand for quality fixed broadband service.
BoFA predicts the addressable market at 320 million households in India, of which 20-30 million would eventually get access to fixed broadband while the next 50 million would likely be catered to using FWA, subject to optimal average revenue per user and customer premises equipment. It also pointed out the cloud of uncertainty around FWA on the affordability side as the ability of 40-50 million households would pay Rs 300-400 for home broadband excluding mobile spending is not known.
Further, BoFA also noted that both Jio and Airtel have different opinions on the price of CPE, Airtel stated that broadband wireless access (BWA) CPEs are priced very high at $170-$180 while Jio believes it will be able to bring it down below $120 as it already has a partner.
