Fixed-line infrastructure continues to be poor in India given the investment needed to cover the country and the affordability of the India market. As of Dec 2014, India had 15.3m fixed broadband homes in India, implying penetration (as a percentage of total households) of 6.0%. BSNL dominates the market, with a market share of c67%, followed by Airtel (c9%).
Reliance Jio Infocomm can have a competitive edge in home FTTH broadband market if the company makes meaningful investment on last mile fibre infrastructure given the pent-up demand for good home broadband solution. We believe RJio is likely to make fibre investment in select cities/town with high affordability and population density. Additionally, the company has recently applied for an MSO license enabling RJio to offer cable TV services. We think RJio may look at cable TV infrastructure to provide broadband services in places where fibre economics is unviable.
India currently has about 80m urban households (HH). Assuming by 2025E urban households reach 93.5m (growing at a CAGR of 1.5%) and fixed broadband penetration is 50%, the number of fixed broadband homes is likely to be 47m. With a 30% market share for RJio, we believe the company could gain around 14m HH over the next 10years
