Why Reliance Jio is slowing down 5G expansion
Reliance Jio, in a move similar to rival Bharti Airtel, is slowing down its 5G network expansion due to low capacity utilization and pending monetization. The telecom giant is now focusing on shifting their existing 4G users to the more advanced 5G service. The strategic shift comes as both companies struggle to fully monetize their next-generation mobile services, amid a lack of widespread use cases.
5G network utilization and future expansion plans
Insiders close to Jio's vendors have told The Economic Times that the company's 5G network utilization is around 15%. However, sources within Jio dispute this figure, claiming it to be more than double. The telecom leader has partnered with Finland's Nokia and Sweden's Ericsson for its 5G equipment. A representative from Jio told ET that any further investment in their network would be "need-based," indicating a cautious approach toward future expansion.
Coverage and user base outperforms competition
Jio's 5G network already covers more than 90% of India's population, beating its rivals in coverage and capacity. The company enjoys a massive lead with a 5G user base of 130 million, against Airtel's 90 million. Even with the increasing demand for Jio AirFiber — a service built on their standalone 5G network — there is still plenty of excess capacity on this nationwide network.
Capital expenditure expected to decrease post-5G rollout
Jio's senior management has also said that the company's capital expenditure peaked in FY24, and will decline from the current fiscal year. This comes after they complete their pan-India 5G network rollout by December 2023. Financial firm JM Financial predicts a major drop in Jio's annual capex to ₹30,300 crore/₹29,700 crore in FY25/FY26 from the ₹45,000 crore/₹55,000 crore run-rate (excluding spectrum) in FY23/FY24.
