India’s Largest Startup – Reliance Jio Infocomm is in quest for perfection before a nationwide launch of bouquet of Telecom services. Nevertheless, the following developments of late indicate that the launch is now imminent.
The soft launch (complimentary preview offer) is gradually being extended to non-Lyf phones (started with Samsung last week, being reportedly extended to iPhones and others shortly) – this will open up the trial offer to a much broader user base. Current average data usage stands at 26 GB across its 1.5m test user base, which is already the second-highest in the country despite Jio not having been commercially launched yet (though average usage will undoubtedly decline once the services become chargeable)
The Indian Government’s DoT has announced the Biggest Telecom Spectrum Auction to begin from Sept-2016, however the upcoming auction is likely to be muted. There are three aspects in which the current context is different from previous auctions: 1) there is no ‘renewal risk’; 2) increased realism on the competitive landscape reducing the number of potential bidders; and 3) access to the spectrum is less uncertain, due to the recent changes in rules on spectrum trading and sharing.
The government has recently completed the harmonization exercise in the 1800Mhz band, which would help release significant spectrum in key markets for commercial use. We believe this is positive for Idea, which is currently spectrum constrained in a few of its key markets. We estimate Idea’s spend at between Rs12-50bn.
700Mhz Damp Squib – 2.0GHz+ Big Blocks on Sale
We do not expect any sale of spectrum in the 700MHz due to its high price. Additionally, the new rev-share framework incentivizes purchase of cheaper Read the rest of this entry »
Reliance Jio will likely have a voice offering (not fully optimal) when they launch, we think that a good quality voice solution will take time for mass uptake till VoLTE as a technology matures and a VoLTE enabled smartphone ecosystem evolves.
Four possible options for offering voice solution; VoLTE relatively better in long-run – As Jio is a 4G-only operator it cannot offer a traditional circuit-switched voice offering). In our view, Jio may initially focus on the dual SIM phones initially (with voice being on the SIM of competitor operator), but over time as the VoLTE enabled smartphone ecosystem improves, we may see Jio become aggressive in its voice offering product.
VoIP – Free calls on Jio’s data network. Limited to consumers using data and Patchy quality while travelling.
Roaming/ICR with existing telcos – Traditional voice solution
VoLTE – Good quality calls even while travelling. Limited smartphone av availability and require dense network
Dual SIM – Jio SIM used only for data and peer SIM used for voice
In our view, a good quality unlimited voice offering Read the rest of this entry »
India’s real estate transactions have traditionally been channeled through myriad networks of local agents, who are perceived to be gatekeepers of the information. This makes the entire process cumbersome and unreliable. This is exactly the pain point that online real estate portals promise to resolve. Not surprisingly, despite being a relatively new phenomenon, these portals are fast becoming the platform of choice for consumers. These online portals provide the following two services. Read the rest of this entry »
4G smartphones sales have picked up materially and so is the focus by big 3 telcos to rollout 4G aggressively. With 4G tariffs being largely in-line with 3G tariffs, we now see limited incentive for consumers to use 3G overtime and see aggressive push towards 4G. This would help the big 3 telcos to prevent their subs from churning to Reliance Jio Infocomm.
With Expected limited differentiation between 3G and 4G tariffs; Improving availability of 4G smartphones almost at the same price points as 3G and Coverage gaps between 3G & 4G diminishing over the next 1-2 year we expect a larger proportion of subs to move directly from 2G to 4G. We consider India to be relatively unique from that perspective (move from 2G directly to 4G) as we note that the telcos have started rolling out 4G even before material uptake of 3G. This is primarily led from a threat from new entrant Jio who would likely be 4G only operator. However we do expect 3G subs uptake to be strong for the next couple of years atleast as 3G coverage would likely be better than 4G coverage.
With all the big 3 telcos expected to have rolled out 4G selectively in key urban areas before Mar-16, we expect their top-end (high usage) consumers to migrate to 4G. This in our view will make it difficult for Jio to poach these
subs as the company would need to focus on offering a differentiated service. We do not consider lower pricing as a sustainable offering by Jio to poach the subscribers Read the rest of this entry »
Telcos’ network quality deterioration is very much in focus, with plenty of newsflow/ discussion on dropped calls – even the prime minister has expressed concerns. Data experience isn’t great either, given low speeds. We believe there are several factors driving this – underinvested networks, inadequate spectrum and some impact from frequency rearrangements following recent auctions.
Hiccups in network expansion in metros – site acquisition is becoming increasingly tough, as telco radiation is being viewed as a health hazard by some activists/ resident associations.
Reliance Jio Infocomm launch, is likely in the next few months, and there are still varying views about what it will do – RIL’s recent disclosures suggest its network and devices readiness. Otherwise, the competitive landscape amongst existing telcos is largely stable, and telcos again Read the rest of this entry »
Reliance Industries (RIL) indicated that the commercial launch of its telecom services (Reliance Jio Infocomm) would take place by Dec 2015, with a soft launch in the near term. Reliance Jio plans network coverage of 80% of the population by the end of 2015, with full population coverage within 3 years. We view this as ambitious as no private telco currently offers 100% population coverage. Capacity at launch of 100mn wireless subs and 20mn FTTH subs. At present, there are fewer than 100mn 3G subs in India. LTE smartphone prices to drop below US$65 by Dec 2015 vs current price of US$100.
Jio Plans to roll out a suite of products like on-demand TV, music streaming, magazines/ news and digital
money/payments. These are in addition to Jio Chat, which was rolled out earlier this year. Jio plans to bundle these between Rs300-Rs500 per month. Mukesh Ambani did not offer much colour on their strategy towards a voice solution. We believe visibility on Jio’s integrated (voice + data) service offerings would improve on release of spectrum sharing Read the rest of this entry »
We have spoken to several constituencies in the Indian mobile ecosystem (mobile operators, handset suppliers, equipment vendors, management consultants, technical experts) and believe that Reliance Jio Infocomm is gearing up for a big launch in H2 2015. We believe RJio’s entry is likely to be a key driver of affordable data pricing and 4G handsets, which will trigger mass data adoption in India.
We believe the handset ecosystem of 4G is still evolving. Therefore, 4G handsets are likely to be significantly more expensive than 3G handsets over the next 2-3 years, likely limiting RJio’s mass market appeal. While RJio has the
option of subsidizing handsets, we believe this would not make sense, as credit enforcement is difficult in India. In addition to this, Reliance Jio will have a herculean task to stabilize its 4G-LTE High Speed mobile Data Network.
Reliance Jio is also likely to face challenges in providing regular voice on a mass market handset, as VoLTE development is still at a nascent stage. VoLTE handsets are likely to be even more expensive, further limiting the mass market appeal. The mass market’s mobile internet needs can be served more efficiently through an HSPA 3G network (especially on 900MHz) Read the rest of this entry »