Telecom - RJIO: Big Bang Debut Slated for December 2015:: Edelweiss

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Mr. Mukesh Ambani, Chairman, Reliance Industries, during the company’s annual general meeting announced that Reliance Jio (RJIO) services will be launched in December 2015. It is targeting 80% of the population coverage at launch, which will be scaled up to 100% in 3 years. To address ecosystem issues, the company will launch 4G handsets at prices starting at INR4,000. The announcement makes it reasonably clear that RJIO launch will be large scale and could pressurise data realisations of Bharti and Idea. Although price elasticity may absorb revenue impact to some extent, Bharti and Idea will have to step up capex to cater to increased data demand.

RJIO launch to leverage large scale infrastructure

After months of speculation, RIL announced that RJIO will be launched in December 2015 and will have 80% population coverage at launch, compared to Bharti’s 86.8% 2G population coverage. It will scale up population coverage to 100% in 3 years. The network has installed capacity for 100mn wireless and 20mn fiber customers. We are surprised with the scale of RJIO’s planned launch given that China Mobile, which operate in 2300MHz band,  has 720,000 sites for similar coverage, although China’s population/landmass is 1.1x/2.9x that of India. RJIO is also planning aggressive broadband roll out and expects to connect with 1mn homes by fiber by April 2016. It also has installed fiber capacity of 250,000 R kms (Bharti 197,000 R kms/Idea 93,400 R kms) and will be doubling it in 2 years. RJIO has also participated in creating international fiber network and expects to carry at least half of the international data traffic on its own network. It has created data centre capacity of 0.5mn for its own use, which will be doubled in 2 years.

Addressing ecosystem issues

RJIO has also tied up with OEMs to launch 4G handsets priced below INR4,000 (~USD62), while currently handsets are available for prices starting INR7,000 (~USD109). It will also create a platform for delivery of many services such as video on demand, High Definition TV, e-commerce, payment solutions etc. The network will also create a platform for user generated content, educational and healthcare applications.

LINK

https://www.edelweiss.in/research/EdelFlash-Telecom--RJIO-Big-Bang-Debut-Slated-for-December-2015/29317.html