The full fledged launch of Reliance Jio Infocomm is still few months away. Even though the company has miserably failed on the rollout obligations as mandated by the Spectrum Auction in 2010, the company has managed to build Big Bubble of Hype which has helped develop a 4G SmartPhone eco-system.
Reliance Jio will also launch its own VoLTE-enabled 4G handset branded LYF besides multiple distribution deals. 4G handsets are currently at 10m (mostly not VoLTE-enabled) but in the past nine months, 4G shipments have jumped from 1m to 5.5m, implying one of every four smartphone shipped is 4G. Smartphones currently account for 45% of the ~250m annual handsets sold and this share could increase to 70% assuming large scale 4G/LTE offerings by the four operators in 2016, enabling 4G handsets to account for half of smartphones by FY18CL. However note at the present, despite ~20% smartphone penetration, 3G penetration still lags at 12%.
With an improving 4G ecosystem, Bharti Airtelexpanding 4G, and the launch of Reliance Jio, Vodafone and Idea?s 4G services, mobile data will continue to drive long term growth. The top three operators continue to gain share and account for 73% of sector revenue and we expect data revenue to nearly triple to US$14bn over FY15-18CL. Meanwhile new entrant Reliance Jio will still face the daunting task of convincing/bundling/subsidizing 4G users to adopt new handsets when 95% of subscribers are still prepaid with an average Arpu of Rs160/month. We maintain that switching to 4G handsets in this low-Arpu prepaid market and wide consumer acceptance of 4G/VoLTE will remain the key hurdles for the new entrant
