Why are Jio and Airtel Slowing Down Their 5G Base Station Expansion?

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The significant slowdown in the expansion of 5G base stations by leading telecom operators Reliance Jio and Bharti Airtel has raised questions about the future of India’s telecommunications infrastructure. According to data from the Department of Telecommunications and analysis by ICICI Securities, the number of new 5G sites added per quarter plummeted dramatically to around 8,000-9,000 in Q2 and Q3 of FY25, from a high of approximately 111,000 in Q2FY24. This sharp decline can be attributed to the near completion of nationwide 5G rollouts and a slower-than-expected monetization of 5G services, compounded by the fact that subscriber penetration has reached only 30-35 percent. The limited use cases for 5G and the affordability issues surrounding 5G smartphones have contributed to this sluggish uptake.

Impact on Telecom Infrastructure Firms

The slowdown in telecom infrastructure growth is expected to significantly impact tower companies like Indus Towers, which rely heavily on Bharti Airtel for tenancy growth. Although Vodafone Idea’s ongoing 4G expansion and initial 5G deployments may offer some support, experts agree it won’t fully offset the current slowdown. ICICI Securities predicts this industry-wide slowdown in base station rollouts will persist into FY26, further inhibiting tower companies’ growth.

Moreover, annual capital expenditures by Jio and Airtel are expected to see a sharp decline in FY26. According to JM Financial, Jio’s spending is estimated to decrease to Rs 28,500 crore and Airtel’s to Rs 29,500 crore, down from Rs 33,400 crore and Rs 48,900 crore, respectively, in FY24. This reduction stems from the near completion of nationwide 5G rollouts and slower subscriber adoption.

The overall expansion of telecom towers has also slowed, with a CQGR of only 0.8 percent. With rollouts largely finished, Jio and Airtel are shifting their focus to enhancing data capacity by overlaying 5G onto existing 4G networks, instead of expanding network coverage.

In summary, the decreased expansion of 5G infrastructure by Reliance Jio and Bharti Airtel, driven by the completion of nationwide rollouts and slower 5G monetization, has negatively impacted telecom infrastructure firms and led to reduced capital expenditures in FY26. Current strategies emphasize optimizing existing infrastructure over expanding network coverage.

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