Airtel to transition to 5G SA in India once traffic picks up

India's second-largest service provider, Bharti Airtel, plans to use 5G standalone (SA) network architecture for fixed wireless access services instead of the 5G non-standalone (NSA) it is using for retail customers. In the long term, the company plans to move the entire 5G network to 5G SA.

"The launch of our fixed wireless access network will be on SA because we believe that the experience on a device that doesn't move will lend itself well to SA. In addition, SA and NSA can work together. So, in some factories, in plants, we may deploy SA," said Gopal Vittal, managing director and CEO at Airtel India, during the Q3 FY2024 earnings call. The company is already trialling 5G SA at over 30 sites in a North Indian city. 

Fixed Wireless Access (FWA) powered by 5G is likely to emerge as a battleground between Jio and Airtel as both seek a bigger share of the market. It is also crucial to 5G monetization in India. The country has low fixed broadband penetration but the demand for quality indoor connectivity is high. FWA is likely to address this gap and Airtel may want to provide superior quality to lead in this market. 

 "As more and more traffic shifts from 4G networks to 5G networks, as more and more devices come in, we will take our existing spectrum bands, refarm it for 5G, and then move to an all SA network," Vittal added. Reliance Jio is currently the only Indian service provider offering 5G SA-based services in the country.

On ARPU improvement

Airtel has seen its average revenue per user (ARPU) increase to INR208 ($2.5) in the quarter ended December 2023, up from from INR203 ($2.44) in the previous quarter.

"This improvement [in ARPU] is really due to three key drivers that continue to kick in: feature phone to smartphone upgrades, prepaid to postpaid upgrades, and driving share of wallet through a combination of data monetization and international roaming. Our 'Premiumization' agenda to upgrade customers to higher value plans has been working well and contributing to our ARPU growth in the absence of tariff hikes," said Vittal.

There is a strong buzz in the industry that the telcos will increase their tariffs after the general election that will take place later this year.

Vittal also mentioned that the company would be adding more sites in five service circles of Maharashtra, Gujarat, Madhya Pradesh-Chhattisgarh, Kerala and Bengal, where it is not leading the market.

On 5G monetization 

Airtel is unlikely to offer any differential pricing for 5G. "I do not believe that 5G should have differential pricing because if you have 100 users and you offer something to them at a slightly higher price … so if you've got a price of X and X plus 5% or 10% higher, then the percentage of users who will take that higher price will invariably be less than 10%. Essentially this means that you don't really get monetization because you don't really get revenue since you are getting a fraction of those users," explains Vittal.

Airtel has about 65 million 5G users and the contribution of 5G-enabled smartphones to overall smartphones is around 15% to 16% but this is likely to increase to 25% by March 2025. 

Vittal also elaborated on the role of FWA and private networks in 5G monetization. "Unfortunately, 5G has become about free data today in India. So, there is no real monetization on the consumer side. FWA will give you some ability to monetize, but it's really modest, given the capex that's gone behind 5G. Then there's also private 5G networks for enterprises … which is a smaller part of the overall monetization. So when you look at monetization, this is not meaningful in any sense."

On sunsetting 2G

Recently, Jio and Vodafone Idea asked the Indian government to develop a policy to accelerate the migration of India's over 250 million 2G users to 4G and 5G networks.

Commenting on sunsetting 2G networks, Vittal said that there has been a gradual move away from 2G and that "in the next few years, you should start seeing a substantial, almost disappearing of 2G. At that stage, we can decide what we do. At this point in time, the amount of spectrum we use for 2G is very limited."