Bharti Airtel and Reliance Jio’s falling 5G network capex spends have taken a toll on Ericsson’s India performance, with the Swedish networks vendor reporting on-year sales declines for five consecutive quarters in market area Southeast Asia, Oceania and India.
As per company data, Ericsson suffered 16%, 28%, 44%, 44% and 38% on-year sales declines in the market area `Southeast Asia, Oceania and India’ in Q1CY25, Q4CY24, Q3CY24, Q2CY24 and Q1CY24 respectively.
“Ericsson has for the past five quarters shown a YoY decline in sales in its India segment owing to Jio/Bharti completing their pan-India 5G rollout. It has specifically called out the normalisation of investments in India as a reason for the region’s decline,” Axis Capital said in a research note seen by ET.
In its Q1CY25 earnings statement, Ericsson said sales “declined significantly in market area South East Asia, Oceania and India, mainly due to lower sales in India”.
Axis Capital now estimates Airtel’s India mobile capex intensity (read: capex/sales) to plunge from a high 30% in FY24 to 13.7% by FY27, while Jio’s is likely to fall even more sharply from a peak 48.3% in FY24 to 12.2% in FY27.
This is since Jio and Airtel are still focused on boosting revenue via the last round of headline rate hikes — taken in July 2024 — and driving monetisation of their 5G businesses via the fixed wireless access (FWA) services route, having invested billions of dollars in buying spectrum and rolling out countrywide networks but not generating meaningful returns. In fact, they are likely to keep the second round of 5G capex plans on hold till they adequately monetise their next-gen wireless broadband operations.
The slowdown in 5G capex spends by India’s top two telcos is also since there are no compelling use cases yet on the 5G consumer mobile services side. A mass-centric 5G devices ecosystem — along the lines of 4G — too is likely to take some more time to evolve.
Accordingly, 4G and 5G equipment supply deals from Vodafone Idea (Vi) have lately become critical for both the European network vendors Ericsson and Nokia, say analysts.
But while Vi has started its initial phase of 5G rollouts, its 5G coverage expansion plans can gain momentum only after it closes its pending Rs 25,000 crore debt-raise. The debt financing from banks is critical for Vi’s Rs 50-55,000 crore capex plans over three years. It has so far raised Rs 26,000 crore via the equity route.
As per company data, Ericsson suffered 16%, 28%, 44%, 44% and 38% on-year sales declines in the market area `Southeast Asia, Oceania and India’ in Q1CY25, Q4CY24, Q3CY24, Q2CY24 and Q1CY24 respectively.
“Ericsson has for the past five quarters shown a YoY decline in sales in its India segment owing to Jio/Bharti completing their pan-India 5G rollout. It has specifically called out the normalisation of investments in India as a reason for the region’s decline,” Axis Capital said in a research note seen by ET.
In its Q1CY25 earnings statement, Ericsson said sales “declined significantly in market area South East Asia, Oceania and India, mainly due to lower sales in India”.
Axis Capital now estimates Airtel’s India mobile capex intensity (read: capex/sales) to plunge from a high 30% in FY24 to 13.7% by FY27, while Jio’s is likely to fall even more sharply from a peak 48.3% in FY24 to 12.2% in FY27.
This is since Jio and Airtel are still focused on boosting revenue via the last round of headline rate hikes — taken in July 2024 — and driving monetisation of their 5G businesses via the fixed wireless access (FWA) services route, having invested billions of dollars in buying spectrum and rolling out countrywide networks but not generating meaningful returns. In fact, they are likely to keep the second round of 5G capex plans on hold till they adequately monetise their next-gen wireless broadband operations.
The slowdown in 5G capex spends by India’s top two telcos is also since there are no compelling use cases yet on the 5G consumer mobile services side. A mass-centric 5G devices ecosystem — along the lines of 4G — too is likely to take some more time to evolve.
Accordingly, 4G and 5G equipment supply deals from Vodafone Idea (Vi) have lately become critical for both the European network vendors Ericsson and Nokia, say analysts.
But while Vi has started its initial phase of 5G rollouts, its 5G coverage expansion plans can gain momentum only after it closes its pending Rs 25,000 crore debt-raise. The debt financing from banks is critical for Vi’s Rs 50-55,000 crore capex plans over three years. It has so far raised Rs 26,000 crore via the equity route.
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