Telecommunications and Network Gear Industry channel checks suggest that Reliance Jio Infocomm has completed ~11,000 base station installations nationwide and is possibly targeting 30,000-45,000 base stations by launch. We expect this target to be met by Dec-14 coinciding with the Founder Birth Anniversary on Dec-28, 2014. Rollout is progressing at a pace of 2,500- 3,000 base stations per month (with the monthly pace accelerating). The launch could happen with 30,000-45,000 sites, with rollout obviously continuing post launch. More Importantly, the rollout is well spread out across the country and not concentrated in just the top
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Reliance Pre-Paid Tariff Hikes Effective – Incumbents Gain
Beleaguered Integrated Telecom company, Reliance Communications’ has raised its headline voice tariff by ~6.7% to 1.6 paise/ sec (vs 1.5 paise/ sec currently). It is also increasing tariffs on discounted plans by up to 20%. eg.1) Reduced 100 mins of STD to 80 mins of STD on Rs45 voucher; 2) talk time reduced to 400 mins from 500 mins on Rs 148 voucher; 3) talk time reduced to 2,500 mins of on-net from 3,000 mins on Rs 259 voucher.
Incumbent Operators Keep the Indirect Onslaught on Consumers
Though incumbent operators have not
Why Reliance Jio Needs sub 1GHz Spectrum for 4G LTE ?
Reliance Jio Infocomm the telecom arm of cash rich Reliance Industries Ltd has already acquired 1800MHz and 2300MHz spectrum to rollout Telecom services. Globally 1800/2100/2300MHz are high frequencies that telcos use for capacity, 700, 850 and 900MHz are globally the bands that telcos use for coverage, as these are low frequencies with long range, and hence help keep cell count to a minimum. In this background we explore why Reliance Jio needs a smaller Spectrum Band to deliver high QoS broadband experience and compete aggressively with incumbents.
700MHz / 900MHz Spectrum Feasibility
The government is likely to auction 30-35MHz of 700MHz in 2015-16. However, 700MHz base price may be set higher than 900MHz making it highly expensive. 700MHz LTE ecosystem is also two years behind 850. 900, being a European 3G band, is not a mainstream LTE band yet and perhaps for a long time. We feel Jio would only select LTE ready frequencies, which makes 700/850MHz a better bet.
Case for Reliance Jio to acquire 850MHz Spectrum for 4G LTE Services
850MHz already in commercial LTE deployment in a
Reliance Jio 4G-LTE Launch will not Derail 2G Voice Business
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
Reliance Jio Acquisition of Videocon + Merger with Tata DoCoMo, Aircel – A Case Study
Consolidation in the Indian Telecom industry is inevitable with weaker players such as Tata DoCoMo / Indicom looking to exit as its already negative networth worsens by the day. The current M&A Rules of the Government indicate 50% combined market share and 25% total spectrum cap (50% in a given band). Market share is based on both subscriber base (VLR-based) and adjusted gross revenues (AGR). We analyze on this front as bottomline of all the Challenger has been bleeding in red for quite few years now.
We have already enlightened that Reliance Jio Infocomm bid in circles where Videocon’s 1800Mhz Spectrum was
Reliance Jio likely to create 2 Business Units – 4G LTE Monetization
According to Analysys Mason, Reliance Jio Infocomm is expected to setup two separate business lines – one for traditional mobile business (competing with incumbent operators) and the other targeting homes (broadband and content distribution platform – competing with broadband players and distribution plays such as Cable and DTH).
Globally, LTE has been monetized either through Selling more data as LTE has higher throughput than other technologies Creating new revenue streams, which involves selling content/ applications (i.e. games, movies on demand, mobile TV etc). A hybrid model is increasingly being employed by telcos for monetizing their 4G networks. Since Reliance Jio is yet to launch 4G services, they are likely to adopt hybrid LTE Model going forward.
Reliance Jio Infocomm Launch in Late 2014 – A New Case for Price War
Reliance Jio Infocomm which is in advanced stages of Testing its 4G LTE networks is expected to launch its Telecom Services in late 2014 with the focus primarily being on data services (although they may launch Vo-LTE voice offerings). We expect Reliance Jio, Being a new entrant, to launch an aggressive offering to gain traction in the already overcrowded telcos market. (Historically, we have seen all new telcos use this approach to gain traction). This may force existing telcos to reduce tariffs to match the aggressive offering.
We believe any new competitor like Reliance Jio who
How Reliance Jio / Airtel will Delpoy 4G Network Using FDD-LTE(1800MHz) & TD-LTE(2300MHz) ?
Reliance Jio Infocomm’s primary focus is 4G LTE and FTTH services. Pre auction, the biggest concern was Reliance Jio’s foray into telecoms and especially 900 MHz spectrum and 2G voice market. Reliance Jio has spent Rs111bn acquiring 1800 MHz spectrum of an average 5.6 MHz pair band across 14 circles in contiguous block. This will enable it to provide FDD LTE services along with TDD in 2300 MHz, including voice to non-RJIL networks. Likewise, Airtel has already rolled out 4G LTE Services in the 2300MHz band with CSFB Technology.
Our discussions with various Network Engineers
How Reliance Jio intends to Deploy & Use 1800Mhz Spectrum ? Voice or 4G LTE ?
Reliance Jio Infocomm won 5-7MHz spectrum in 1800 band in 14 circles. These 14 circles account for 71%+ of industry revenues, and include all the metros and Category A circles.
Reliance Jio Infocomm in a press release said,
There are several mobile phones and devices available today which have the capability to operate both TD-LTE and FD-LTE technologies in 1800MHz and 2300MHz bands as well as conventional 2G / 3G networks. Rapid strides in global LTE rollouts and introduction of several new chipsets is making LTE enabled smart mobile phones and devices affordable. In any case, Wi-Fi enabled 2G/3G device can access RJIL’s services through an
Reliance Jio Infocomm 1800MHz Spectrum Win Confirms Takeover of Videocon Telecom
The 1800Mhz Spectrum Auction comes to an end with Reliance Jio Infocomm winning 14 out of the 22 Circles. R-Jio has won 5MHz-7MHz of 1800MHz spectrum in 14 circles for a total investment of ~Rs111bn. We believe it would look to complete the pan-India footprint in 1800MHz (to be used for 2G voice) through acquisition Videocon Telecom.
The Circles where Reliance Jio has bid and won the Spectrum complement the circles where Mukesh Ambani backed Videocon Telecom has already secured