Indian Telecommunications even today is 2G Voice dominated market with operators expanding footprint into rural areas to get the best they can from the infrastructure they have rolled out over decades. Even until last Quarter over 85% of Telcos’ Revenues were from Voice. In this backdrop, Mukesh Ambani managed Reliance Jio Infocomm, has no viable low-cost voice strategy, may struggle to get subscriber traction as a pure data approach has struggled globally. Reliance Jio is likely to target Tier 2 / 3 Cities for their 4G LTE Launch as it was easier for them to acquire Right of Way and light its Towers with virtually unlimited Optical Fiber Carrying Capacity.
We highlight that globally TD LTE is likely to be used for data offload in markets where both customer affordability and data usage are high, suggesting a mismatch of LTE rollout in India, which scores low on both affordability and data usage.
We understand the handset ecosystem is weak for mass-market TD-LTE handsets and, as such, it is likely Jio will go for customized handsets. We note there are very few telcos globally that have succeeded with a customized handset-based approach.
Given this, we remain sceptic about launch by Reliance Jio and despite the progress the company has made by tower sharing, ecosystem issues will prevent the 4G launch being meaningful in the next 2 to 3 years unless they can change the Telecom policies to suit their needs to get a MVNO kind of arrangement with other operators for voice.