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Jio commits Rs 2 lakh crore capex for 5G

ICICIdirect Research 30 Aug 2022 DISCLAIMER

What's Buzzing:

To build its 5G network, Reliance Jio committed a total investment of Rs 2 lakh crore and plans to roll out pan-India 5G by December, 2023.

Context

Jio has informed that it will deploy the latest version of 5G, called Stand-Alone 5G, which has zero dependency on its 4G network. With Stand-Alone (SA) 5G, Jio can deliver services such as low latency connectivity, massive machine-to-machine communication, 5G voice, Edge computing and network slicing, and metaverse. It would also be only telco to deploy sub-giga hertz spectrum, which is essential for deep indoor coverage and expects to seamlessly combine these frequencies into a single powerful 'data highway', using an advanced technology, called Carrier Aggregation. The company indicated that by Diwali, it will launch Jio 5G across multiple key cities, including the metropolitan cities of Delhi, Mumbai, Kolkata and Chennai. Subsequently, it plans to increase the Jio 5G footprint month after month. By December 2023, it expects to deliver Jio 5G on a pan-India basis.

Our Perspective

We highlight that the company has spent ~Rs 88000 crore in spectrum and the remaining capex of ~Rs 1.1 lakh crore is higher than likely ~Rs 75000 crore capex spend by Airtel in the next three years, given that SA mode needs more antennas and big radios spends. We highlight that the overall intention of Jio is to capitalise on the fixed wireless broadband opportunity and accelerate home broadband wherein its long term target is to reach 100 mn homes vs. ~7 mn currently. However, one has to see how the cost per home pass (currently at ~US$200/household vs. traditional fibre home at ~US$50) stacks up, going ahead. We do not expect any challenge in device ecosystem as its partnership with Google for 5G smartphone will fill this gap. We view 5G announcement in relatively untested mode as a parallel equivalence of 4G LTE (which was nascent) when Jio launched and succeeded.

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