Standalone 5G may be Jio’s trump card

Standalone 5G may be Jio’s trump card

Jio is also expected to launch cheap 5G handsets under its JioPhone Next brand. A substantial contribution from spectrum usage charge savings may also give an upside to Jio, which has announced a capex of 2 trillion over the next few years. However, this could include the recent 88,078 crore spent on acquiring spectrum. At Monday’s annual shareholders’ meeting, Reliance Industries chairman Mukesh Ambani said unlike other operators who use 4G infrastructure to deliver 5G signals, Jio will have dedicated 5G infra or so-called standalone (SA) 5G. “The payback for 5G will come from: 1) market share wins. It expects 5G SA (standalone) to help differentiate data experience from peers; 2) user upgrading to higher data allowance packs and paying for incremental Arpu; 3) more FWA (fixed wireless access) customers; and 4) largest contribution from SUC savings,” Sanjesh Jain, an analyst at ICICI Securities, said in a note. About 1.1 trillion is expected to be spent on infrastructure, of which 60% would be for mobile and 40% on hardware for fixed broadband. Since Jio would begin 5G rollouts from October and cover India by December 2023, the mobile capex will be fully-front loaded and deployed over the next 18-24 months, analysts said. “Monetization of this capex will require higher revenues in JioFiber, market share gains in mobile, revenues from enterprise clients and tariff hikes,” said analysts at Jeffries in a note. Jio will be able to provide up to 1 Gbps speed on the go to consumers at affordable prices, Ambani said but did not indicate the tariffs at which it will launch 5G. Jio is set to launch 5G services in several cities, including the metros of Delhi, Mumbai, Chennai and Kolkata, by Diwali and will go head-to-head with Airtel, which has said it will launch 5G in 5,000 cities and towns by March 2024. Jio’s standalone 5G technology will work independent of its 4G network, on top of its indigenous end-to-end 5G stack for providing affordable services to consumers. On the other hand, Bharti Airtel will use NSA, or non-standalone technology, which will work in tandem with its 4G network. “We believe competitors like Bharti will be forced to respond with own aggressive 5G,” Sachin Salgaonkar, an analyst at Bank of America Global Research, said in a note. “This is likely to bring forward industry capex, and crimp industry RoICs (return on invested capital) as telcos may get more competitive even before price repair has completed,” said analysts at JP Morgan. Salgaonkar added that RIL was likely to subsidize its consumer premises equipment on fixed and wireless broadband, which could keep capex higher but help tap a big market. Jio plans to connect 100 million households through fibre or through its fixed wireless access service, Jio AirFiber. He, however, cautioned the risks of rollout being pushed beyond 2023 for Jio, given supply constraints.
“Jio’s approach to 5G has striking similarities to its approach to 4G, with the company investing aggressively—potentially ahead of time—to create a state-of-the-art network,” analysts at Jefferies noted. “Jio is working on a 5G SA (standalone) handset, but the rollout is some time away. It expects to have 5G SA handset at 11,000-12,000 at the time of launch,” Jain added. Queries sent to Jio on its device and tariff plans remained unanswered, but industry officials said Jio might push its JioPhone Next brand of devices under its partnership with Google for 5G, just as it did during its 4G services launch back in 2016. Ambani said on Monday Jio was also working with all leading global smartphone equipment makers that have committed to support Jio’s standalone 5G. “The brands that will bring in 5G smartphones that work on standalone 5G will test their phones on the frequencies with Jio, especially the 700 MHz band,” said a senior industry executive, asking not to be named. Jio is unlikely to undercut prices of 5G devices or introduce them at a reduced rate as 5G services are likely to be adopted by premium users who will be willing to pay higher tariffs and buy expensive smartphones, the executive added. “JioPhone Next phones will be at market prices, and global brands will be free to price devices as per their strategies,” he said. India currently has 50 million 5G devices in the market, and experts suggest at least 20-30 million of them would support 5G SA. Phone makers, including Chinese companies, have begun collaborating with telcos to test out 5G NSA and SA devices, insiders said. “We have been working with operators in India to test the 5G experience on different Oppo devices, including 5G calling, network speeds, and VoNR calling, all of which have showcased outstanding results. The announcement by Jio is the development that will bring all our efforts to fruition,” said Tasleem Arif, vice-president and research and development head at Oppo India.

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Airtel may offer 5G on higher plans

Airtel may offer 5G on higher plans

“My feeling is that with 5G, penetration will increase so quickly that it will be like any other offering. Anybody who has a 5G handset will get 5G. They will consume more and automatically go to a higher tariff plan. This would result in higher revenues,” Gupta said. “I really don’t think there is going to be something like a pure premium 5G. At best we could start giving 5G on slightly higher plans, but let the operating people decide what they want to do.” He added that 5G, much like older and even future technologies, will be supply-led, with users consuming more data with faster internet being made available to them, contributing to higher revenue for telcos. “If you keep supplying, demand will keep coming. When you provide more capacity and faster speeds, the consumption is bound to grow. It is human nature that if you get faster internet, you will consume more data,” Gupta said, adding that tariff plans in India are abysmally low compared with global rates. “Without a doubt, tariffs have to go up,” he added. The average revenue per user (Arpu) for all Indian telecom service providers is well below 200, with Airtel leading among peers with an Arpu of 183 for the quarter ended June. Telcos have said that they will raise tariffs further this year, having increased prepaid tariffs by 20-25% in November. Telcos want to boost Arpus to about 300-350 in the medium term, but despite the increases, India tariffs will remain much lower than in Western markets. For instance, AT&T’s postpaid mobile Arpu was $54.81, or 4,379, in the June quarter. Gupta said the entry of a new player, even in the long term, was not a concern for Airtel as it has become battle-hardened, facing several years of competition, including the onslaught by Reliance Jio in 2016, and had managed to maintain healthy revenues, profits and free cash flows. In the recently concluded spectrum auctions, Adani Enterprises unit Adani Data Networks secured 5G spectrum in four circles in the 26GHz band, aimed at offering enterprise or captive service. The company has maintained that it does not have plans to enter consumer services, but several analysts said the Adani Group might enter the industry in the long term.
“We respect all competitors but are not perturbed by any competitor. If, after so many years in this business we could not face competition, we would not have been here. We have gone from strength to strength with each trouble which has come our way. In the face of adversity, one has to remain strong mentally, operationally, culturally and financially. You have to keep the balance sheet very strong,” he said. However, Gupta raised concerns about the financial health of Vodafone Idea, stating that raising funds was critical for the company, which has been unable to pay pending dues to Indus Towers, where Bharti Group owns 47.7%. “That (Vodafone Idea’s weak financial health affecting payments to Indus Towers) obviously is a matter of big concern. We wish them well because we fundamentally believe that for the country, it is good to have three operators,” he said. He further added that the telecom sector’s financial health has to be kept in the black for the industry to make future investments. “You have to look at the return on capital employed, which is at present very low. We have to really work towards making it a healthy industry because this will require continuous investments. Financially weak companies cannot make such investments. Only healthy companies can. Therefore, in national interest, the sector has got to be financially healthy,” he noted. Indus Towers, jointly owned by Bharti Airtel and Vodafone Group Plc, made provision for doubtful debt of about 1,233 crore in its results for the quarter ended June and reported a 66% fall in profits because of delayed payments by one of its customers. Indus did not name Vodafone Idea, but said it had revised the expected credit loss policy to 60 days past due from earlier 90 days and taken on an additional impact of 954.7 crore in its earnings statement for the quarter. Gupta said 5G would give huge growth upside to tower companies as network rollouts will mandate the setting up of more tower infrastructure. On the mandatory use of non-Chinese gear for telecom networks, Gupta said that the law of the land must be followed when national security was concerned, even though Chinese players helped Airtel grow in its initial years with low-cost gear.

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Spectrum acquisition: Four companies pay Rs 17,876 crore upfront to DoT

Spectrum acquisition: Four companies pay Rs 17,876 crore upfront to DoT

Bharti Airtel said Wednesday it has paid Rs 8,312.4 crore upfront to the Department of Telecommunications (DoT) towards dues for the spectrum it had acquired in the recently concluded 5G auctions. The telco said it paid dues for four years upfront, as it would help future cash flows and its 5G rollout.
The DoT also got Rs 7,864.7 crore in upfront payment from Reliance Jio, Rs 1,679.98 crore from Vodafone Idea (Vi), and Rs 18.94 crore from Adani Data Networks, an Adani Group arm. As a result, it has received a total of Rs 17,876 crore.
Airtel plans to launch 5G services this month. Over the last year, it has also cleared Rs 24,333.7 crore of deferred spectrum liabilities, the telco said.
“The company believes that this upfront payment coupled with the moratorium on spectrum dues and AGR (adjusted gross revenue) related payments for four years will free up future cash flows and allow Airtel to dedicate resources to single-mindedly concentrate on the 5G roll out,” a statement by Airtel said. It has tied up with Ericsson, Nokia, and Samsung for network agreements.
According to DoT’s rules for receiving payments from the spectrum auctions, companies have the option to pay dues in 20 equated annual instalments. However, telecom operators are also free to pay the entire amount or part of it upfront, with the minimum duration for upfront payment being two years. On August 5, the Department had issued demand notices to all the four companies to pay up their spectrum payments in 10 days, with Wednesday being the final day.
India’s biggest ever spectrum auction for 5G airwaves had ended on August 1 with bids upwards of Rs 1.5 lakh crore coming in after seven days of bidding spread over 40 rounds, belying initial expectations that the auction process would be wrapped up in under three days.
Jio emerged as the largest spender in the 5G spectrum auction, acquiring almost half of all the airwaves sold for more than Rs 88,000 crore, and was also the only one to have acquired spectrum in the premium 700 MHz band. Airtel, shelled out Rs 43,084 crore to acquire a total of 19.8 GHz of spectrum in the 900 MHz, 1,800 MHz, 2,100 MHz, 3,300 MHz and 26 GHz bands. Vi spent Rs 18,799 crore and bid for certain medium and high frequency bands. Adani Data Networks acquired spectrum only in the 26 GHz band and spent Rs 212 crore.
In an earnings call last week, Gopal Vittal, MD and CEO, Bharti Airtel had said that the company plans to launch 5G services starting August and, by 2024, is expecting to cover large parts of the country, including in rural areas. The company has prepared detailed network roll-out plans for 5,000 towns in India, he said.

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Stocks to Watch: Titan, Bharti Airtel, Reliance, Equitas SFB, Power Grid

Stocks to Watch: Titan, Bharti Airtel, Reliance, Equitas SFB, Power Grid

Here is a list of top 10 stocks that will be in news today: Titan: The Tata group firm said its sales in the April-June quarter were up nearly three-fold on a year-on-year basis, helped by a low base of the Covid-19 impacted quarter in the last year. “Sales in Q1FY23 grew 205 per cent YoY on a low base and clocked 3-year CAGR of 20.5% over Q1FY20,” it said. Bharti Airtel: Arm Bharti Airtel International (Netherlands) BV, which manages Airtel’s Africa business, has raised tender offer to buy back up to $450 million (about 3,550 crore) of senior notes. The company had issued a tender offer to purchase $300 million worth of its 5.35% guaranteed senior notes of $1 billion due 2024. The offer commenced from June 21 and will expire on July 19. Reliance Industries: The company’s retail arm Reliance Retail has signed a long-term franchise agreement with US apparel major Gap Inc.The partnership will mark Gap’s return to India with its casual wear apparel brand. Equitas Small Finance Bank: The lender said its gross advances grew by 22% from a year ago to 21,699 crore as of June 30. The bank’s disbursements during Q1 FY23 rose by 156% to 3,238 crore as against 1,265 crore. Total deposits increased by 19% year-on-year to 20,386 crore. Power Grid Corporation: The board of the state-owned company has approved two proposals to raise up to 11,000 crore through the issuance of bonds and term loans. The board approved a proposal to raise funds up to 6,000 crore from the domestic market through issue of secured/unsecured, non-convertible, non-cumulative/cumulative, redeemable, taxable/tax-free debentures/bonds under private placement during FY2023-24 in up to 20 tranches. NTPC/Gujarat Alkalies and Chemicals: The state-owned power giant’s arm NTPC RE Ltd and Gujarat Alkalies and Chemicalshave inked a pact to collaborate for renewable energy and synthesising green chemicals. Deep Industries: The company has received Letter of Awards from ONGC Limited, for charter hiring of two 1000 HP mobile drilling rigs for Ahmedabad asset for a period of three years. The total estimated value of the awards is around 150.24 crores.
Nykaa Fashion: FSN E-CommerceVentures, the company that owns Nykaa, has announced the launch of its underwear and athleisure brand for men, Gloot. Gloot products are made from a special fiber which enables them to have an 83% lower carbon footprint compared to a generic comparable fibre, the company said. TVS Motor Company: The company has forayed into the premium lifestyle segment with the launch of 225-cc bike Ronin priced at 1.49 lakh, ex-showroom. The bike comes in three trims tagged at 1.49 lakh, 1.56 lakh and 1.69 lakh, respectively. It plans to sell around one lakh units of the model in the current financial year. IndusInd Bank: The bank has tied up with MoEngage, an insights-led customer engagement platform, to deliver a differentiated digital experience across multiple customer journeys. As part of the partnership, Induslnd Bank will leverage MoEngage’s technology platform to deliver ‘Gen Z’ digital banking experience to its customers. 

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Reliance Jio, Bharti Airtel In Position To Buy Pan-india Spectrum, Uncertainty On Vil Bid

Reliance Jio, Bharti Airtel In Position To Buy Pan-india Spectrum, Uncertainty On Vil Bid

BofA Securities report released on Monday said that Reliance Jio and Bharti Airtel are in a position to buy pan-India 5G spectrum, however, uncertainty remains around Vodafone Idea’s bids for the radiowaves.

It would be difficult for any telecom firm, which has not bid for 5G spectrum in a particular circle to roll out 5G on the existing 4G bands, because the existing networks are running at a capacity, and hence there is limited free spectrum which could be carved out, the report stated.

It noted: “Higher reserve price is likely to disincentive any new telcos to bid in the auction and only telcos with strong balance sheets like RIL, Bharti are in a position to buy pan India 5G spectrum. It remains unclear how VIL would fund its 5G bids.”

The management at VIL has focused on top core circles and the firm is likely to selectively bid in their core 3G and 4G circles, BofA research analysts believed.

The report said, “Post 5G, we believe VIL would be further vulnerable if it doesn’t have pan India 5G spectrum.” 

The BofA report estimates that operators may be interested in 3.5 GHz in this auction as it is the primary band for 5G, while the premium 700 MHz may garner limited interest given its high pricing and as its propagation characteristics are similar to that of 800 and 900 MHz band.

“Interest on 28 GHz likely in the next auction even if the government decides to auction this time,” the report stated.

The Centre expects to hold the next round of spectrum auction by June-end or early July. The 5G services are expected to make their way in India by August-September.

The Department of Telecom is likely to move the 5G spectrum auction proposal to the Union Cabinet for final approval this week.

The Telecom Regulatory Authority of India (Trai) has recommended a mega auction plan of over 7.5 lakh crore for over 1 lakh megahertz spectrum in case the government allocates it for a period of 30 years.

In case of 20 years, the total value of the proposed spectrum auction will stand at around 5.07 lakh crore at the reserve price, according to back-of-the-envelop calculations.

With large swathes of spectrum remaining unsold in the last two auctions, Trai has recommended selling airwaves in all existing bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz and new slots of 600 MHz, 3300-3670 MHz and 24.25-28.5 GHz.

BofA Securities also says that Jio will be aggressive in looking to deploy 5G, especially standalone 5G, which would force other telcom players also to front load capex investments.

“A key challenge could be on the device ecosystem front given the semiconductor supply-chain issues and relatively higher price points,” the report said.

BofA Securities said the Centre is expected to consider allocating or auctioning E and V bands for backhaul, which would help reduce the dependence on fibre backhaul connectivity, especially in tier 2 and 3 cities.

“The timing of this is not unknown but the government is keen to allocate the band as soon as it could,” the report added.

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