Reliance Jio to start voice, data services in five cities by June
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Mumbai: Reliance Jio Infocomm Ltd will introduce its voice-plus-data mobile services in five cities by June, according to two people aware of the company’s strategy.
It could then roll it out across the country through the rest of 2015.
The Reliance Industries Ltd (RIL) unit has been working on its wireless broadband services since June 2010, when it acquired Infotel Broadband, which had won spectrum to launch such services across India.
Since then, there have been several reports about Reliance Jio’s strategy that is reported to encompass voice, news, entertainment, education, video, e-commerce—just about anything one can do with a handheld device with a fast Internet connection.
Last week, Reliance Jio finally launched its first offering, Jio Chat, a messaging application that is up against WhatsApp. Jio Chat has nothing to do with the data-rich 4G services the company is launching—other than the fact that it will ride atop them—but it indicates Reliance “Jio’s intention to eventually become a single platform for users—voice, messaging, and e-commerce”, analysts at Citi Research wrote in a report last week.
That intention would appear to be translating itself into action—finally.
New Delhi, Mumbai, Ahmedabad, Lucknow, and Nagpur will soon see the launch of the 4G service, the first person, a Reliance Jio executive said. More cities—those where 90% of the infrastructure is ready—could be added to the list, this person said, speaking on condition of anonymity.
“We have made significant progress in being ready to start service, including physical network infrastructure, systems and processes, sales and distribution network, applications and services, content, etc. We are working with strategic partners who have committed significant resources, know-how and global talent to support deployment and testing activities currently underway,” a Reliance Jio spokesperson said in an e-mail.
The spokesperson added that 2015 will see the phased launch of Reliance Jio across India. The company plans to start services in 900 towns initially, according to RIL’s 2014-15 annual report.
Reliance Jio has to meet a rollout deadline in 2015.
A company must roll out services across 90% of the metros where it has won spectrum in an auction and 50% of rural areas within five years of receiving spectrum, according to the Telecom Regulatory Authority of India (Trai).
Reliance Jio has pan-India 20 megahertz (MHz) under the 2,300MHz broadband wireless access spectrum in 22 circles and 5-7MHz spectrum under the 1,800MHz band in 14 circles.
The first executive said as a pre-cursor to the launch of mobile services, Reliance Jio will get its employees to use these services, starting the end of April.
“Many of the employees will be given 4G-enabled Samsung S6 and Samsung S6 Edge mobile phones to experience the 4G service,” he said.
The second person, who works for a vendor to Reliance Jio and who asked that neither he nor his company be named, claimed that Reliance Jio is ready with its wireless offering and has used Samsung mobile devices for this, but added that it will take some time for the company to launch its so-called fibre-to-home services that offer 4G connectivity to personal computers.
“RJio envisages a pan-India presence in the course of time. Notably, a very low proportion of towers in India are linked through fiber in India and data transfer speeds/quality is constrained by microwave communication. RJio needs to lay large amounts of fiber before launching services. To get municipality approvals in 900 cities/towns and laying fiber across the cities is a time-consuming exercise,” said the report.
While the company is moving slow on the fixed line infrastructure of fibre-connectivity, in terms of wireless access, besides its own network, Reliance Jio has also been extensively making use of about 300,000 towers of various companies, including Bharti Airtel Ltd and Reliance Communications Ltd.
RIL’s investments in the telecom business have cast a shadow on the company’s stock, with some analysts expressing concern over the lack of clarity on the rollout of services and return on investment.
“Even though there is limited clarity with respect to the roll-out plans of Reliance Jio’s telecom services, we do not rule out the possibility of significant losses in the initial years, given (1) large operating overheads… and (2) high fixed costs of depreciation/amortization and interest on the indicated capital employed of Rs.700 bn (billion),” said a 9 December report by Kotak Securities Ltd.
In a report dated 8 December, Bank of America Merrill Lynch cut its FY16-17 earnings per share estimate for RIL by 2-6% “due to the higher-than-expected loss (Rs.53-54 bn vs Rs.30-50 bn) for its telecom subsidiary Reliance-Jio”.