They add that Bharti Airtel and Vodafone Idea, they said, would require to spend $10 billion capex each over the next five years, while Reliance Jio Infocommm’s incremental 5G capex outgo is estimated lower at around $8 billion as the Mukesh Ambani-led operator already has more 5G-ready fiberised towers than the incumbents, having already spent around $2 billion on tower fiberisation.
They also said that it would be tough for Vodafone to sustain such big-ticket capex spends given its continuing market share losses and weak financials, which they said could choke its 5G play. They also said the need for a dense site footprint and fibre backhaul in 5G would shift the balance of power towards larger and integrated operators with strong balance sheets like Jio and Airtel, while those with high gearing levels are at risk given the sustained high capex needs.
As per UBS, “Airtel and Vodafone Idea will each need to spend $2 billion annually on 5G radio and fibre capex spread across 5 years. Which is 65% and 85% of Airtel’s and Vodafone Idea’s current annual India capex run rates respectively.”
UBS added: “Jio’s 5G capex would be lower due to its larger tower footprint and higher proportion of towers on fibre backhaul compared with Airtel and Vodafone Idea”.