In India, the fixed broadband penetration as a percentage of population is low at 1.3% FY14E (vs mobile penetration of 72%) with copper being the key infrastructure pipe. The fixed broadband market is a very fragmented one with a large number of internet service providers (ISPs) and multi-service operators (MSOs) offering broadband, with no real dominant operator from a pan-India perspective. Off late, a few niche FTTX operators like Sterlite, Spectranet and Radius Infratel are offering fiber broadband services with speeds close to above 50Mbps.
In our view, the target market will be select areas like high-rise buildings and high-density locales in top 120 cities. Reliance Jio is slow in rolling out fiber given the time taken for getting government / other approvals for right of way (ROW). We therefore believe that initially revenue contribution from FTTX business will be smaller. Given the high investment nature of this business (as getting ROW is costly) and smaller balance sheet of other operators, we expect a strong balance sheet operator like R-Jio to dominate this market and estimate it to have nearly 50% market share in FTTH market by 2024
