Reliance Jio Infocomm rollout can, at best, be gradual and, in part, complementary to existing telecom services and not competing and, as such, concerns are overdone about its entry in the 2G Voice Business. To understand this let us first have peek into RJio’s network.
Reliance Jio Infocomm’s Network Infrastructure Build Out
Reliance Jio’s 4G network will be built around 1.8GHz & 2.3 GHz, the company will need to deploy at least 0.15m BTS over next three years to have meaningful presence. In-building coverage will be an additional challenge that Jio faces as both the 1,800 MHz and 2,300 MHz spectrum bands are poor for in-building coverage. In other words, the present spectrum holdings may allow Jio to have some value proposition in urban centres, but it may struggle in semi-urban and rural markets. We don’t rule out Jio building Wi-Fi zones in select pockets across its key 14 circles as well.
Reliance Jio Infocomm – Products / Services
Data-cards/dongles/pocket routers – expect Jio to launch pure data devices to begin with. The attempt will be to churn data traffic from incumbent telcos. Notably, CDMA players admitted this, but the overall market for data cards is very small, and we estimate it at no more than Rs 6000 Crore.
Reliance Jio FTTH Broadband – In our view, Jio will leverage its investments in fibre and not merely use them for backhaul, but we expect Jio to compete with cable TV operators providing residential broadband.
VoLTE Vs GSM 2G Voice
TD-LTE will work but TD-LTE VoLTE is still a few years away from mass market, in our view. As such, it is very hard to see how Reliance Jio can get viable commercial scale with this expensive, tricky, early-stage technology; In addition to this, we highlight that multi-mode, VoLTE handsets are likely to be expensive at somewhere around USD300. However, from a long-term perspective, we expect VoLTE to work.
The spectrum limitations of Airtel, Vodafone and Idea could bode well for Reliance Jio, but the gains are likely to be restricted to urban centres only, in our view. We think this is the biggest challenge facing incumbent telcos. They will have to figure out methodologies to re-farm 900 MHz from voice to data in as many markets as possible.