Aircel fights for survival as Indian government aims for 5G glory

The consolidation among India’s operators continues, even as its government sets out new strategies for 5G. Aircel has applied for bankruptcy protection, and has entered talks with two larger rivals – Bharti Airtel and Reliance Jio – for intra-circle roaming (ICR) agreements which could keep its networks running.

Aircel filed for corporate insolvency late last month after failing to reach an agreement with its main lenders on restructuring its debt mountain of INR155bn ($2.37bn). The operator said its objective was to find a way to continue operating, rather than wind up its business, but of course this will be dependent on keeping its services to customers in place while it negotiates a potential exit from bankruptcy.

This will be tough to achieve – roaming partners like Airtel, and tower partner GTL Infrastructure, have reportedly withdrawn from their usual arrangements because of non-payment of dues. GTL is said to have shut down part of the Aircel network and to want to offer the sites to others.

Aircel is majority owned by Malaysia’s Maxis and has suffered from the high levels of competition, debt and spectrum costs across the Indian mobile market, as well as low ARPUs. The price wars have been worsened by the entry of disruptive Reliance Jio with its aggressive tariffs, while Aircel’s rivals have been strengthening their customer bases and economies of scale via acquisitions.

Against that backdrop, Aircel has seen its market share fall from 8.1% to 7.3% within the past year, with its subscriber base falling from 91m to 85m over the same period.

Despite the challenges to its MNOs, India’s government is determined to make more impact on 5G than it did in 3G or 4G, in which it was late to the party. This time, it has set an agenda to have first commercial 5G launches in 2020 and to hold spectrum auction later this year.

It has allocated INR5bn ($77m) to 5G developments, including a huge research project spanning five Indian Institutes of Technology (IIT).  This will establish a 5G testbed to support telcos and start-ups in developing and validating equipment and services.

In addition, the Department of Telecommunication (DoT) recently said it would set up a 5G R&D center in partnership with IIT Chennai, while IIT Delhi has signed a 5G memorandum of understanding with Ericsson. The Swedish vendor will set up a Center of Excellence, with a 5G testbed and start-up incubator, at the institute.