Jio takes the lead in 5G deployment, Vi struggles with funding issues

Indian telecom operators Reliance Jio (RJio) and Bharti Airtel have made significant progress in deploying 5G infrastructure, a recent telecommunications report by Emkay Research has highlighted.

As of July 2, 2023, approximately 2,75,000 base transceiver stations (BTSs) have been deployed. In the last three months alone, they have added around 1,35,000 BTSs. However, Vi (Vodafone Idea) is facing challenges due to a paucity of funds and has fallen behind its competitors in the race to roll out 5G technology.

Nearly 50 percent of the BTSs have been added in only six states — Maharashtra, Uttar Pradesh , Tamil Nadu, Karnataka, Gujarat and West Bengal. Emkay Research states that, “RJio has leadership in 5G rollout, with approximately 80 percent share of the overall industry’s BTS deployment, while Airtel is being selective in its 5G BTS deployment.”

According to Emkay’s analysis, Vi will only be able to launch 5G services in 10 circles across seven states using its internal accruals of approximately Rs 8300 crore. Nokia and Ericsson have refused to supply 5G equipment to Vi on credit, further worsening their funds crunch. As a result, Vi will be unable to cover all 17 of its priority circles, leading to additional market share losses in those areas. The report also highlights a steady decline in Vi’s active market share over the last two years, dropping below 20 percent as of April 2023 from 25.4 percent in April 2021.

Vi is actively pursuing fundraising options, including a potential infusion of Rs 2000 crore by its promoters. However, as per Emkay Research, even if Vi manages to secure additional funding and launch 5G services in all its priority circles, it will still struggle to catch up to Airtel’s current 5G rollout and will significantly lag behind Jio’s 5G BTS deployment.

Emkay Research analysts maintain a “Buy” preference for Airtel (Target price: Rs 920) and Jio (Target price: Rs 2,750) over Vi. They expect Vi to continue to lag behind its peers in 5G rollout, citing Vi’s limited flexibility to invest and its persistent subscriber losses.

At 12.21 pm, the stock of Bharti Airtel was trading at Rs 877 and Reliance Industries was trading at Rs 2,620 on the National Stock Exchange, up 1.2 percent and 1.37 percent from the previous close.

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