Consumers are rejoicing the launch of Reliance Jio by Mukesh Ambani. As per the launch, voice calls are to be free and data is at an ever low price and unlimited.
Reliance Industries, beginning its telecom journey in 2005, has invested an amount of about Rs 150,000 crore up to now, with Airtel investing only Rs 160,000 crore since 1996.
The Chinese 4G model is being implemented by Reliance Jio, prominently in areas of technology of transmission, low-cost handsets, low-cost data packages and it offers digital services to the whole value chain.
Reliance Jio will obtain pan-India license in the 2300 MHz frequency band, with many latest international 4G launches implementing the LTE standard. In this standard, the higher the frequency, the lower the signal strength, although it offers higher data delivery speed. Reliance Jio may also use other bands as a backup in circles or regions where 2300MHz signal strength is weak.
Reliance Jio offers and services
As of now, Reliance Jio intends to provide 4G service, using LTE technology, in the 800MHz, 1800MHz and 2300MHz bands through an integrated ecosystem and has spectrum in 20 of the 22 circles in the country in the 800MHz band and 14 circles in the 1800MHz band. Its license for the flagship 2300 MHz covers all 22 circles.
With a strong line-up of smartphones, tablets and devices across all price points, the heavy price range, which was previously a key barrier to mass adoption of broadband data, high definition voice, video calling, messaging and rich value-added services, has been removed by Reliance Jio.
Jio will offer services to the whole value chain of the telecom and e-commerce business.
Reliance Jio has apps for its 4G offering, with plans to become a diversified service-content company.
Reliance Jio investment and expected ARPU
With investments of Rs 1,50,000 crore or $23 billion and plans for a 100 million user acquisition in the shortest possible time, the expected ARPU is Rs 300-500 per month, with an annual turnover of $4 billion to $4.2 billion per month in a year.
Reliance Jio effect on the telecom industry
As per reports 50 lakh jobs will be created directly or indirectly with this announcement at Jio, with some of it being rearrangement, but at the same time some jobs may also be lost or cut down by small telecom businesses due to the effect of Jio.
This move can reduce the telecom carriers in the country to only three excluding the state owned BSNL and some regional carriers, with relevant impact to take place in the coming 5 to 6 years.
# Airtel
Airtel has built up sufficient spectrum by buying out the spectrum of Videocon, Aircel Augere wireless, and Qualcomm in the recent past.
Airtel and Singtel also got into agreement that the latter will acquire 7.39 percent stake in Bharti Telecom Limited via Temasek Holdings, which holds majority stake in Singtel for $659.51 million.
Hence, Temasek and Singtel jointly own 39.78 percent of Bharti Telecom, and another 15.01 percent in Bharti Airtel via its subsidiaries including Pastel Ltd and Viridian Ltd.
Airtel with last years revenue, PAT and surplus figure of Rs 60,000 crore, Rs 8,000 crore and Rs 83,000 crores, respectively, has a total debt of Rs 90,000 crore or $13 billion, as of August 2016.
Spectrum auctions in October can lead to pressure for Airtel as the cut in voice and data tariff by as much as 40-50 percent will impact the ability of Airtel to raise funds.
Airtel will not invest in Idea as the spectrums will overlap and there will not be any additional benefit or leverage except the added customer base and base towers.
# Vodafone
Vodafone is not yet public yet in spite of plans to go public with IPO. The IPO may be delayed by at least 2 to 3 years. With a financial turnover of Rs 44,500 crore or $7 billion, Vodafone is also locked in a Rs 14,000 crore tax dispute with the Indian authorities pertaining to its acquisition of a majority stake in the business from Hutchison Whampoa in 2007.
Vodafone may acquire Tata telecom and Internet business in India, TTSL-Docomo probably being acquired first.
# Idea Cellular
Idea Cellular, with a revenue of Rs 3,600 crore or $0.55 billon, which is 12 to 16 times lower than Airtel / Vodafone, may try to merge or sell off within the next 12 to 24 months.
# Others
Reliance Communications (RCOM) may also merge with Reliance Jio, with the RCOM infrastructure to be used for 2G and 3G spectrum by the latter.
Finally, DOT has opened up MVNO in India recently, and this may lead to Idea and BSNL pushing MVNOs.
Basant Tomar, a senior telecom professional
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