Come December and the country’s hyper-competitive mobile telephony market would witness one of its biggest disruption in recent times — the commercial launch of services by Reliance Jio — which promises to bring in a bouquet of services integrating voice, data and high-speed broadband at the most competitive price points, a perfect setting for another round of tariff war in the sector.
Announcing the much-awaited launch date at the Reliance Industries 41st annual general meeting, chairman Mukesh Ambani said, “We are currently in the pre-launch testing and stabilisation phase of this large and complex network. Over the next few months, we will initiate an extensive beta launch involving millions of friendly customers across all our markets. The beta programme will be upgraded into commercial operations around December of this year.” FY16-17 would be the first full year of the company’s commercial operations, he said.
This would be the second time that RIL’s telephony arm promises to take the market by storm, the first being in 2003. In a throwback to that year’s “Monsoon Hungama” offered by Reliance Infocomm, part of the then-undivided RIL, Ambani said that the company would come out with 4G-enabled handsets with an entry price below Rs 4,000 and voice and data services at Rs 300-500 per month.
“Jio and Reliance Digital teams have worked with all the leading device manufacturers of the world to ensure availability of 4G LTE smartphones across all price points — from ultra-premium models on the one hand to entry models on the other,” Ambani said.
“The combination of Jio’s strong initiatives and a supportive global environment, gives me the confidence that we will see 4G LTE smartphones at prices below Rs 4,000 by December of this year,” he added.
“Our plan is to provide the same power of computing, communication and information to every individual, whether in towns or rural areas, that the US President had 10-15 years ago. All this at about Rs 300 to Rs 500 per month,” he said during his over-an-hour-long speech, a third of which was devoted to RJio.
Analysts, rival operators and consumers have for long waited for the launch of services by RJio, which re-entered the telephony market in 2010 by acquiring Infotel Broadband, which was the only company to bag broadband wireless access spectrum in all the 22 circles in the country. The Mukesh Ambani firm went on to acquire spectrum in the 1800 MHz band across 14 circles in the February 2014 auction and subsequently acquired spectrum in 800 MHz in 10 circles and 1800 MHz in six circles in this year’s auction. As a result, today the company, having spent Rs 34,000 crore in acquiring spectrum assets in the last five years, has the largest footprint of liberalised spectrum in the country and is suitably positioned to provide a range of voice and high-speed data services.
Ambani said that the company would also come out with a bouquet of of applications and would provide consumers perfect convergence between voice, data and entertainment. In April RJio had launched an application — Jio Chat — which integrates chat, voice, video calling, etc, and Ambani said that in the very first few weeks it had notched up a subscriber base of over 1 million.
The timing of the launch would certainly be disruptive for incumbent operators are already facing a tough competition from the over-the-top operators. Though the country’s top three operators having around 75% market share are healthily poised to give RJio tough competition, any tariff war at this time is definitely going to bruise existing operators in the short term.
At present, around 92% of subscribers in the country access the internet via mobiles, according to Trai data. The top four players have 84% share of the data market compared with a 77% overall revenue market share and 72% minutes market share.
While it is impossible to take a view on RJio’s network quality before launch, at least the existence of an opportunity in the market for good quality data with easy-to-meet voice benchmarks should make RJio believe it has a serious chance, said the latest India Telecom Sector Survey by Credit Suisse.
“From the point of view of telco stock investors, we continue to believe it is not so relevant from a near-term perspective whether RJio’s efforts succeed or not. Importantly, with more spectrum on a larger network, the new operator is likely to be a bigger threat than what we had envisaged,” it added.
The RIL stock closed at Rs 889.15 on the BSE, up 1.36%, on Friday. The benchmark Sensex was up 0.21%.
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