Telecommunications & Technology
Reliance Jio Infocomm announced on April 2, 2013 a telecom infra sharing deal for its telecom venture with Reliance Communications (RCom) of Anil Ambani Group. The deal entails payment of Rs12bn by RJI as indefeasible right to use (IRU) fees for lifetime usage of 120,000 kms of nationwide inter-city optic fibre network owned by RCom. It also gives RCom reciprocal access to RIL’s future fibre network.
It gives some visibility on Reliance Jio’s 4G LTE telecom venture,
If Reliance Jio Infocomm launches with a data-only dongle priced at ~Rs5,000 (US$91), it could target the high-end subscribers who currently contribute 5% of industry revenues (and hope to win only the data spend of these customers). The total addressable market for RIL Infotel is restricted to ~US$750 mn upon launch share) not big enough to build a business case considering the US$2.5 bn paid for spectrum by the company in 2010.
Addressable market with a data + voice handset strategy
However, by launching a handset [LTE Capable with CSFB] priced at Rs7,500 (US$136), the addressable market upon launch becomes the subscribers who account for 20% of industry revenues worth US$8 bn (and the company has a chance at capturing the entire spend of these customers, including voice). This compares with ~US$4 bn the company may have to spend on 2G and LTE spectrum
It is widely believed that Reliance Jio Infocomm will do to data what Reliance Infocomm did to voice a decade ago – democratise the product by taking the price points low enough to have mass appeal. The strategy we have outlined above is seemingly elitist, in that the focus is not on the bottom of the affordability ladder but on the top end.
Apart from the absence of a Robust Network combined with Mukesh Ambani’s ego problems to strike a Passive Infrastructure Sharing Deal with Reliance Communications, we believe that the key hindrance for Reliance Jio Infocomm to launch a truly mass-market strategy is the weak device ecosystem and hence high prices. In voice, the company tried to resolve the problem by offering upfront cash subsidy on device costs. However, we believe
Reliance Communications has acknowledged that it is in talks with Reliance Jio Infocomm to rent or lease towers from RCOM for the latter’s rollout of its 4G TD-LTE network. RCOM has a portfolio of around 55,000 towers with no external tenancy. It will be an impossible task for Reliance Jio Infocomm to rollout a Nationwide … Read more
Newspapers are buzz with 4G perceived as a game changer technology which will once again open the floodgates of competition. However, we believe the technological backbone for providing voice services on 4G network is still in nascent stage of evolution and should not pose any substantial threat in the near term (at least 18 months).
Currently, Reliance Jio Infocomm has a pan-India 4G LTE licence and Airtel has started 4G services in Kolkata, Pune and Bengaluru. We believe operators can launch 4G services via three options.
Roll out data services only
Reliance Jio Infocomm which is going to launch 4G LTE Services Shortly in Mumbai and Delhi has tied up with Samsung, Global Leader for Android SmartPhones. The TD-LTE 4G SmartPhones are expected to be Priced starting at $100. On its part Reliance Jio 4G Plans will be made available starting as low Rs 100 for … Read more
The GSM operators have accused the DoT of extending undue benefits to Reliance Industries by illegally paving the way for it to offer voice calling services with 4G airwaves, which were originally planned to be used only for high-speed Internet services. In what could be a repeat of the epic 2003 battle between GSM carriers … Read more