Airtel, Reliance Jio scale back 5G expansion amid lower network investment

The quarterly addition of 5G sites in India has dropped sharply, with Jio and Airtel slowing deployments due to reduced capex, impacting telecom infrastructure firms

The expansion of 5G base stations in India has significantly slowed in recent quarters, highlighting the reduced capital expenditure on network infrastructure by the country’s leading telecom operators, Reliance Jio and Bharti Airtel, according to a report by The Economic Times.

 

According to an analysis by ICICI Securities, the number of new 5G sites added per quarter has fallen sharply to around 8,000-9,000 in Q2 and Q3 of FY25, compared to approximately 111,000 additions per quarter in Q2FY24, the news report said citing data from the Department of Telecommunications (DoT).  

 

Impact on tower companies  

The decline in 5G site additions is expected to impact telecom infrastructure firms, particularly tower companies like Indus Towers, which rely on Bharti Airtel for tenancy growth. While Vodafone Idea’s (Vi) ongoing 4G expansion and early-stage 5G deployments may provide some support, it is unlikely to fully offset the slowdown, especially as Airtel has largely completed its 4G expansion in rural areas, The Economic Times reported.

   

ICICI Securities noted in a research report that the industry-wide deceleration in base station rollouts during the first nine months of FY25 could persist into FY26, negatively affecting tower companies. It expects Indus Towers to experience slower growth in new tower additions, given Bharti Airtel’s near-completion of its 4G network expansion.  

 

Reduced capex by Jio and Airtel  

 

Investment in network infrastructure by Jio and Airtel is projected to decline sharply in FY26. According to JM Financial, annual capital expenditures for Airtel and Jio are estimated to drop to Rs 28,500 crore and Rs 29,500 crore, respectively, from higher levels of Rs 33,400 crore and Rs 48,900 crore in FY24, the news report said.  

 

This reduction is attributed to the completion of nationwide 5G rollouts by both telecom giants. Analysts also point to the slower-than-expected monetisation of 5G services, with subscriber penetration remaining at 30-35 per cent, due to limited compelling use cases and affordability issues for 5G smartphones.  

 

Tower growth moderation

Overall growth in telecom tower deployment has seen a substantial slowdown in recent quarters, with a compounded quarterly growth rate (CQGR) of just 0.8 per cent. This trend is driven by Jio’s completion of its 4G site expansion and Airtel nearing the final stages of its rural 4G rollout. The news report quoted analysts as saying that 5G deployment is primarily being implemented as an overlay on existing 4G infrastructure to enhance data capacity rather than expanding network coverage.