Strong signal: India likely to be among top three global markets for 5G

Since the Chinese market is off-bounds, India will be a key market for global telecom gear makers

Global telecom gear makers say that they expect India to account for about 15 per cent of the worldwide market for the 3.5 GHz-based 5G radio and network. The vendors are assuming that the telcos will be able to provide 5G coverage to over 50 per cent of the geographical area of the country in the next two years.

India’s share of the market would go up if the geographical reach is higher.

A top executive of a leading telecom vendor, who does not want to be named, says: “India will surely be amongst the top three global markets. We expect the share of China to fall as the bulk of their rollout has been done and US telcos are pushing 5G rollouts. In India the rollout obligations are far more aggressive than what we had expected earlier. So we expect 50 per cent plus coverage in 2 years.”

Indian telecom operators are yet to place firm orders for 5G radios, but are expected to do so once the 5G spectrum they won in the auction is allocated to them by August 10.

China, which has aggressively rolled out 5G services since 2019, accounts for more than 25 per cent to 27 per cent of the global market, according to global telecom gear companies.

Reportedly, China’s 5G services have already been extended to all urban areas of all prefecture-level cities, 98 per cent of county-level towns and 80 per cent of rural towns. By the end of 2022, China is expected to have 1 million 5G base stations and a subscriber base of over 330 million, according to the country’s three major operators.   

Meanwhile, the US market for 5G radios has also increased substantially, with the country auctioning large amounts of 5G spectrum last year, and the government pushing for a faster 5G rollout to bridge the gap with China. The volume of new orders has seen the US market closing in upon China, and is now pegged at 20 per cent of the global market for 5G gear, say vendors, based on their estimations.

The Indian market becomes significant as China, after offering limited contracts to European vendors in their home market, has stuck exclusively to Chinese manufacturers such as Huawei and Zte. This has been in response to the US urging countries across the globe not to buy 5G equipment from them, because it allegedly contains spyware — an allegation which Huawei has denied.

India, UK, Japan, South Korea and Australia are amongst those countries which have not allowed Chinese telecom gear vendors to compete for 5G contracts. 

The geopolitical tension between US and China, which has made a big market like China out of bounds, makes the Indian market important to the global gear makers. But it also restricts Indian telcos’ choice of telecom gear players to only Nokia, Ericsson and Samsung, and possibly, some open radio access network (O-RAN) through a tie-up between operators and their partners.

This will give the global vendors a larger opportunity in India than they had during the launch of 4G services, when, according to estimates, the Chinese gear makers had cornered around 20-25 per cent of the Indian telecom gear market. That market will now be divided amongst the Big Three — Nokia, Ericsson and Samsung.  

The Indian government expects the telcos to invest Rs 2-3 trillion in 5G services in the next two years, a large part of which will be used to roll out their network. 

According to estimates, the global market for 5G infrastructure will be around $50 billion by 2027.
       

STRONG SIGNAL

• Centre is expecting Indian telecom firms to invest Rs 2-3 trillion in 5G in next two years
• Chinese roll-out and reach is already high in 5G, but is limited to only Huawei and Zte
• Indian operators are expected to place orders in a few days
• With Chinese market out of bounds, India becomes key market for Nokia, Ericsson and Samsung
• With Chinese gear players not permitted to participate, the three players will have a larger market in India to grab than in 4G, where the Chinese played a key role