reliance-jio-4g-lte

Airtel 4G LTE PAN India Spectrum Complete, May Skip 700Mhz Auction

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Airtel 4G LTE PAN India SpectrumIndia’s Largest Telecom Operator, Airtel has acquired 2300MHz in 8 Circles from Aircel to complete Pan India 4G-LTE Footprint by virtue of combination of 1800Mhz and 2300Mhz contiguous spectrum blocks.

The acquisition of spectrum in three circles has been done at a total consideration of INR35bn (~4% of current net debt at the company). Aircel had paid INR 34bn for this spectrum in the 2010 auction, which implies a 47% premium that Bharti has paid when adjusted for residual life. The same spectrum has a reserve price of INR 44bn in the upcoming auction, so Bharti has only paid a 14% premium when adjusted for residual life vs this. The impending entry of Reliance Jio has

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How RCom gets Free Ride on Reliance Jio’s 4G Network ?

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RCom Gets Free 4G from RJioRCOM has entered into active infra sharing with 4G entrant Reliance Jio, which allows RCOM to offer 4G services without investing much capex. RCOM active sharing limits the upside for the buyer of RCOM towers assets as demand by RCOM (anchor tenant) for additional towers in the near to medium term may not be much.

In our view RCOM had the option to either ask for a premium from Jio for trading of 800 spectrum or leverage Jio’s 4G network and offer 4G services. Charging a premium may have allowed RCOM to pay down some debt and invest in 3G but may have prevented RCOM from participating in 4G.

RCOM has chosen to offer 4G by leveraging Jio’s 4G network. Given that in the medium to long run 4G is likely to be more popular than 3G,

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Can Reliance Jio Exploit the Net Neutrality Loophole for Free 4G ?

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NetNeutrality Loophole IndiaWe were the Strongest Advocates of 100% Neutral Internet in India. We recommended the TRAI specifically not to leave any loopholes and had clearly written in our recommendations about the potential loophole of Intranets / Closed Electronic Communications Network, yet the TRAI has kept the door wide open for exploitation with veto power in its hands.

How Reliance Jio / Airtel / Other Telcos will Exploit the Loophole ?
The regulator clearly suggested in its recent tariff order that rules prohibiting differential pricing for data will not be applicable to Closed Electronic Communication Networks (CECN) or in other words, the intranet platforms of telcos. Hence telcos may attempt to monetize such an opportunity/regulatory exemption. That said, telcos will find it difficult

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Blind Gaming by Incumbents Amidst Reliance Jio Launch

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Mobile Broadband Vs VoiceGiven the impending threat of Reliance Jio entry, incumbents – Airtel, Vodafone & Idea have accelerated the pace of mobile broadband data network rollout in a blind game forgetting the Economics of Return on Investments. Cumulatively, they have added 72.8K 3G/4G BTSs over the past four quarter (total installed base of 172.5K), with Airtel having added 35.7K, Idea 19.8K and Vodafone 17.3K during the quarter. Idea increased its capex guidance to INR75bn (from INR60-65bn earlier), the third increase in capex guidance over the last 9 months (1.5x of initial guidance), on account of faster data rollout.

Two key debates would continue for the sector – 1) pricing vs volume and what it does to the market dynamics; and 2) capex intensity vs returns – how much is enough given the slowing mobile data growth [3G / 4G].

Idea which in the past has

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How is Reliance Jio Powering Last Mile 4G LTE Broadband ?

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exclusive1Last mile connectivity is the biggest challenge for 4G since the tower density needs to be much better than 2G/3G due to signal strength concerns. This is complicated the number of agencies (municipalities, housing societies, offices, etc) Jio has to seek approval from for laying infrastructure with minimum disturbance to existing ecosystem and managing the rhetoric around radiations.

As we write this, large parts of Mumbai have seen the laying of optical fibre cables by Jio. Further, in congested areas where telecom towers are difficult to put up, Jio has put up mini-towers (see below). Since they can be put up on existing street-light poles, traffic junctions, footpaths, etc the entry-barriers are low, both in terms of

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Airtel to Increase ARPU amidst Reliance Jio Launch

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Airtel Vs Reliance JioBharti Airtel expects modest annual increases in blended ARPU in coming years led by data (assuming rationality on the part of Reliance Jio). Airtel admits voice ARPUs will continue to dip but does not think cannibalization of voice by high-speed data is a risk, likely underestimating this voice ARPU reduction risk. Airtel thinks that higher ARPU subs (post-paid or high-end pre-paid who would be early 4G adopters) hardly churn and that pricing per se is not a factor in churn at the high-end. Additionally, it is rapidly rolling out 4G on a large scale not giving its high-end 3G/4G subs reason to shift to competition. Data traffic will continue to grow at a robust pace driven by increases in penetration and per sub consumption growth. Better data network and newer technologies (such as 4G) itself allows higher consumption on a like-for-like basis.

Plain Vanilla 2G Voice
On the contrary, incrementally new subs are coming from low-ARPU rural areas, total voice ARPU will likely continue to trend down. Urban wireless penetration

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Reliance Jio’s Contrarian Approach to Airtel – Adopts Asset Heavy Model

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Contrary to the current trend, Reliance Jio prefers an asset-heavy model. The basic premise is that assets created at a large scale and competitive capital cost provides a long-term competitive advantage through business cycles. Cost-leadership is the core mantra of Reliance Group – this is achieved via capacity creation at a massive scale. For the telecom sector, spectrum and technology are viewed as the two factors of production – the former is scarce and finite whereas technology costs tend to decrease exponentially. So Jio would tradeoff in favour of cheaper spectrum with nascent ecosystem compared to a technology with good current ecosystem.

At launch we estimate Jio to have

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4G LTE Progress – Reliance Jio vs Airtel

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Airtel 4GIndia’s leading Integrated Telco, Airtel is doing the right thing by launching services before competition kicks in and trying to get users on its 4G network to maintain market share. However, Reliance Jio’s entry will increase the competitive intensity, putting pressure on data tariffs.

Reliance Jio Infocomm commercial launch will be around December 2015 as we had predicted, covering 80% of India’s population. Offerings will include voice, high-speed broadband, digital commerce, media and payment services. Over the last few months, Airtel has been ramping up

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How Reliance Jio Plans to Attack Airtel, Vodafone,Idea ?

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Reliance jio Attack Airtel Vodafone IdeaData clearly suggests that top 30% customers account for ~70% of revenues in the India Wireless Industry. In this backdrop we plan to analyze new entrant Reliance Jio Infocomm’s positioning and onslaught on Airtel, Vodafone and Idea to gain high end Wireless Customers as well as snatch away Data customers from Reliance Communications’ NetConnect and Tata DoCoMo Photon Mobile Broadband Consumers.

4G LTE Handset The SmartPhone handset changing cycle is less than 24 months for high end customers. Customer should shift handset (to LTE) is

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How Reliance Jio Built the 2nd Largest Telecom Network ?

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Reliance Jio NetworkReliance Jio Infocomm’s installation of ~70,000 LTE sites for the launch network is mostly completed. With the recently-acquired spectrum, the company has a decent mix of 1800/800 MHz spectrum for voice coverage (with 2300MHz for data capacity). In addition to 2300MHz and 1800MHz, RJio acquired 800MHz spectrum in nine circles in the Mar-15 auctions, most of which can be used for LTE (CA). Thus, including RJio’s last year’s bidding, RJio now has either 1800MHz or 800MHz spectrum in 20 circles, which account for 92% of industry revenues

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