5 reasons why RJio fear looms large over incumbents

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Remember the Reliance group’s ‘Monsoon Hungama’ of 2003, when the new offering took the telecom industry by storm as it offered multimedia mobile phones for a down payment of Rs 500, with three monthly plan options— Budget 149, Budget 249 and Dhirubhai Ambani Pioneer Offer.

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The offering led to a revolution in the telecom sector and as a result, millions were added to the country’s subscriber base. Now, once again it’s the Reliance Industries telecom arm Reliance Jio, which is hogging the limelight with its plans to launch 4G services in the country by next year, and the market is eager to see that whether it would able to create the same frenzy of ‘Monsoon Hungama’ this time too. Well, only time will tell that!

Meanwhile, the incumbents such as Bharti Airtel, Vodafone are putting on a brave face as they invest heavily to upgrade their networks, launch 4G services aggressively and say that they are prepared to compete with their formidable rival. But certain facts could not be ignored which help Reliance Jio to get an upper hand over the incumbent players.

Here take a look.

1. Reliance Jio is most likely to lure the heavy data users of Bharti Airtel, Vodafone through high speeds and high cap on data downloads. Analysts believe that RJio has credible options to build the LTE ecosystem in India and coverage quality and voice services concerns could be addressed by carrier aggregation and VoLTE. Reliance Jio can support five times more data from its 4G site compared to a 3G site of Bharti or Idea. However, the incumbents seem less prepared with their poor LTE ecosystem, an Edelweiss report says.

2. Initially, the company is expected to cover 80% of the population in the country and moving ahead it would target 100% population in the next three years. At the same time, Bharti’s network covers 86.7% of the population currently. Besides, RJio is also rolling out high speed internet services via FTTx in over 900 cities/towns which will enable the telco to offer a wide gamut of digital services across various sectors. Bharti Airtel recently announced its plans to deploy FTTH network; however, it did not mention any specific rollout plan.

3. Those who thought voice services could be a challenge for RJio, on 4G services, it is looking to provide advanced voice calling service using voice over LTE (VoLTE) technology and the company has already showcased the technology successfully with China Mobile in Barcelona. Going by reports, Jio lab tests and trials have been successful and they have not faced any problems in interconnect of VoLTE calls with 2G/3G networks.

4. Analysts expect that Rjio will offer 2.5-3GB data at Rs 250-300 price points and for incumbents to offer the same price points would be a bit difficult, keeping in mind their large capex, debts, among others. Reliance could be targeting ARPU between Rs 300-500 versus Rs 237 of incumbents, the Edelweiss report says.

5. Coming to distribution strategy, under its ‘LYF’ brand, Reliance Retail will offer affordable 4G LTE smartphones. It has over 1,000 Jio centers across the country and its distribution network will include 0.5 million connectivity outlets and 1 million additional recharge outlets at launch. Besides, the company is aggressively tying up with smartphone brands, chipset manufacturers and OEMs and it is also working on pocket router solution in a bid to connect with any 2G/3G smartphone to 4G services network.

Reported By

Having over six years of experience in business journalism, Krishna has a knack for writing on telecom and IT. She believes that tryst with technology is the best thing that has ever happened to mankind. Krishna is a telecom analyst

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