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5G networks

India set to start 5G pre-commercial trials early next year

Move comes at a time when local wireless carriers are grappling with losses and debt

India's plan to test 5G comes as Bharti Airtel and rival Vodafone Idea reel from a price war with newcomer Reliance Jio Infocomm.   © Getty Images

MUMBAI (NewsRise) -- India is set to start the pre-commercial trials of 5G internet technology in the first quarter of 2020 as the country gears up to introduce the next generation of wireless networks.

The government had in June said the 5G trials will start in 100 days, though concerns about allowing China's Huawei Technologies to participate in the trials resulted in unforeseen delays in the roll out. China had, in June, given wireless service providers the licenses required to roll out commercial services, after South Korea and the U.S. The move also comes when India's mobile phone companies are grappling with losses and surging debt amid tariffs that are among the lowest in the world.

A decision to allow Huawei into India's 5G roll out has been pending after the company was blacklisted by the U.S. citing national security concerns. The U.S. also lobbied with other countries, including India, to ban its equipment. Huawei has denied all allegations.

Earlier this year, the Indian government set up an interministerial panel to decide the criteria for the 5G trials, including whether Huawei should be allowed to participate. While a decision on Huawei's participation is still pending with the prime minister's office, India's telecommunications department officials said all are welcome.

"The interministerial committee has given its report on Huawei. We are considering the report," Anshu Prakash, secretary of the telecom department, told reporters in New Delhi Tuesday. "All who honor our national security interest are welcome for 5G trials."

Meanwhile, the government is postponing the auction of 5G airwaves that was due before March, to the first quarter of the next fiscal year to give enough breathing room for the cash-strapped mobile phone companies to shore up their stressed balance sheets.

The financials of India's top mobile phone companies Vodafone Idea and Bharti Airtel have been imperiled by the cut-rate price competition gripping the sector since the launch of billionaire Mukesh Ambani's Reliance Jio Infocomm more than three years ago. The price war eroded profits and revenue of operators, pushing the industry into consolidation. The debt-ridden carriers were also hit by a double whammy when India's Supreme Court last month upheld the telecom department's demand for $13 billion in dues. Both Bharti and Vodafone Idea have filed a petition to review the top court's order.

Post the verdict, Vodafone Idea's British parent said it won't make any further investments in the Indian venture, while its local partner Aditya Birla Group's Chairman Kumar Mangalam Birla warned that the company will shut down if the government does not offer a reprieve on its liability.

All the operators have since then raised tariffs and also got a two-year moratorium from the government to make the payment for spectrum charges.

On Tuesday, the regulator offered a fresh breather to the operators by delaying the abolition of interconnection fee that operators pay each other, by a year to January 2021. The move offers a boost to Bharti and Vodafone Idea, as the new carrier Reliance Jio is likely to end up paying incumbents more for calls originating from its network to rivals.

The regulator also launched a consultation paper seeking views of stakeholders on whether it should fix a floor price for tariff. The incumbent players have long been demanding a floor price for tariffs after Reliance Jio started commercial operations offering free voice calls and cut-rate data tariff.

Shares of Bharti Airtel lost 0.4% in Mumbai trading, while that of Vodafone Idea closed down 7%. The benchmark S&P BSE Sensex gained 0.5%.

--Ujjwal Narayan and Dhanya Ann Thoppil

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