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Bharti Airtel and Reliance Jio are expected to collectively invest an additional $2 billion in new 5G network equipment to expand and enhance their next-generation mobile broadband services. This decision comes as the user base continues to grow, with a rise in the number of smartphones supporting 5G technology. Sources indicate that Airtel, led by Sunil Mittal, has issued a new request for proposal (RFP) for the second phase of 5G equipment purchases. Meanwhile, Jio, owned by Mukesh Ambani, is in discussions with global vendors for similar purposes.

Ericsson and Nokia are anticipated to be the primary suppliers for both Airtel and Jio’s new 5G base station requirements. Samsung is also expected to handle a smaller portion of these orders. Each telecom company is likely to invest around $1 billion in acquiring 5G network equipment, primarily focusing on radio base stations.

Both companies had initially invested significantly in 5G equipment and deployments in 2022. However, the pace of expansion slowed due to limited monetization opportunities. As of July 31, 2024, the Department of Telecommunications (DoT) reported 452,000 5G base stations, accounting for 15.5% of the total installed base of 2.925 million stations, mostly comprised of 4G.

Despite the slower rollout, the 5G user base in India is steadily increasing. By the end of March, Airtel had 75 million users, while Jio had reached 130 million by the end of June. This growth is driven by unlimited data offerings, improved customer experience, and the increasing availability of 5G-enabled smartphones, which now make up 70% of overall smartphone shipments.

As data traffic shifts from 4G to 5G, both Airtel and Jio are preparing for further expansion. This next phase is supported by recent tariff hikes of 11% to 25%, which have bolstered their financial positions. However, the overall depth of 5G coverage still lags behind that of 4G, necessitating continued investment.

Airtel is also preparing to transition to offering 5G services in standalone (SA) mode in select markets, with plans to expand this capability nationwide. This transition is significant as it marks a shift from the non-standalone (NSA) mode currently used, which leverages existing 4G infrastructure. The move to SA mode is driven by the increasing demand for 5G services and the need to provide comprehensive coverage and full 5G capabilities.

The new investments in 5G equipment are expected to benefit Nokia and Ericsson, who have seen reduced revenues following Jio and Airtel’s decreased network capital expenditures. The fresh contracts from these telecom giants could help revitalize the network equipment market in India.