Cos boost 5G budgets on likely demand, better investment profits

The roll-out of 5G services is drawing investments in information and communications technology (ICT) from companies seeking to capitalize on this potential growth market.

About half of Indian enterprises surveyed by KPMG said they have increased budgets, especially for non time-critical communications use cases. The report was  released at the India Mobile Congress (IMC) 2022, a four-day telecom event held in New Delhi, where Prime Minister Narendra Modi announced the rollout of 5G services on Saturday.

While Airtel has said that it will start offering 5G services to customers in eight cities, Reliance Jio has said its services will begin from Diwali. The report also found that over

85% of enterprises across sectors are anticipating a return on investment (ROI) of 20% in 5G and other industry 4.0 use cases.

A senior executive at one of India’s top telcos said the most common request that he gets currently are for virtual reality- (VR) based learning solutions. He said hospitals, factories etc., are looking to use 5G connectivity and VR to teach employees how to use specialized products among other tasks.

Firms expect the ROI to rise in the next two to five years with the growing use of technologies such as artificial intelligence (AI)/machine learning (ML), augmented reality (AR)/ virtual reality (VR), and blockchain, the report said. As much as 52% of enterprises said they expect 5G to increase efficiency in operations and supply chains.   “5G will be a catalyst to India’s path of reaching 20% digital GDP by 2025. With 5G, many of the digital transformation initiatives will achieve scale and acceleration,” said Yezdi Nagporewalla, chief executive, KPMG India.

Enterprises are expected to be the biggest user of 5G services . “5G will not only catalyze new opportunities for the telecom industry but also for enterprises across industries. It has the potential to improve productivity, optimize service quality and reduce costs, leading to overall better consumer experiences,” said Saurabh Kumar Sahu, managing director and lead, Communications, Media and Technology, at Accenture.

Many enterprises have already started deploying private 5G networks. Jayanta Dey, executive president, 5G Business at HFCL, a telecom equipment maker, noted that large-scale consumer deployment of 5G infrastructure will begin next year; however, enterprise 5G infrastructure is being upgraded currently.

“The backhaul infrastructure is being deployed by telcos and associated firms right now, and the rest will follow within the next two quarters,” he said.

“By using reference designs, startups are already building a host of products that will lead to greater bandwidth for real-time communications, data, and analytics,” said Sachin Kalantri, senior director, product at Qualcomm India.

Though a 5G network is based on a 4G network, it uses higher frequency radio bands resulting in faster speed and 10x lower latency, which can help enterprises handle the always-connected requirements much better than 4G or public 5G networks.

That said, the KPMG report also shows that enterprises are also worried about challenges such as integration with legacy networks, low adaptability of partners in a multi-vendor ecosystem, proving ROI and timelines, and inconsistent network infrastructure.

KPMG, in its recommendations, said that the government should increase R&D funding, provide financial incentives to cloud service providers (CSPs) and system integrators, and accelerate tower fiberization (connecting towers with optical fibre cables). CSPs on their part will have to quickly upgrade their cores to support all forms of communications.

According to KPMG, Indian CPSs have the lowest average revenue per user (ARPU) globally despite the high volume of data consumption. 5G will help them increase capacities, open new sources of revenue and increase ARPU.