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India to be late in 5G adoption, still focuses on 4G: Moody’s

Moody’s expected that markets of Korea, Japan and Australia will lead in rolling out the 5G services in 2019, in the APAC region

Credit rating agency Moody’s Investors Service said on Wednesday that India will possibly be the late adopters of 5G services along with other Asian countries like Bangladesh, Indonesia and Malaysia as telcom companies in these countries are still focusing on densifying coverage of 4G network.

“The markets in these countries have declared their intentions for 5G, but there is no clarity regarding the details and timelines,” Moody’s said in its outlook for the telecom sector for Asia Pacific (APAC) region.

On the contrary, Moody’s expected that markets of Korea, Japan and Australia will lead in rolling out the 5G services in 2019, in the APAC region, whereas China, Singapore, Hong Kong and Philippines would be the adopters of 5G.

Potential challenges to address

In September, Manoj Sinha, Minister of Communications had said that India cannot afford to lack behind in rolling out 5G. He had indicated that Indian government would take a decision shortly on the recommendations of a high-level 5G Forum to implement 5G services in the country.

However, the Minister also cautioned that were some potential challenges such as data privacy issues, 5G infrastructure sharing rules and allocation of spectrum, which would need to be taken care before the roll out.

Rational pricing is emerging

Nidhi Dhruv, Vice President and Senior Analyst at Moody’s, however, observed that an environment of more rational pricing is emerging in India in the longer-term, in the wake of alliances pointing towards only three to four players in the market. However, she does not see any short-term catalyst for increasing average revenue per user (ARPU) for telecom companies in a fiercely competitive Indian market.

Moody’s further said that the consolidated revenue of Bharti Airtel, led by Sunil Mittal, reflects the growth in subscriber base and stable operations in Africa region. This would partly offset the challenges of the mobile segment in India.

The credit rating agency estimated that the capital expenditure/revenue of telcom companies in emerging market such as Bharti Airtel, Indosat, Axiata and PLDT to cross 30% this year and in 2019, mainly from investments in densifying the 4G networks.