eliance Jio Infocomm Ltd, the telecom business of Mukesh Ambani’s Reliance Industries Ltd (RIL), is likely to launch its fourth-generation (4G) mobile phone services by March-April, according to analysts. Jio, the brand name of Reliance Jio Infocomm, officially launched its services last month on Reliance founder’s day, when it offered its around 80,000 employees up to four connections free-of-cost to test its services.
Analysts, including international and domestic brokerages, said the initial results of Jio have been positive and the company is preparing to start commercial operations once it finds all the processes and platforms are robust enough for the larger roll-out. RIL, in its investor presentation on Wednesday, said that all regulatory compliance measures are in place for Jio’s launch.
Though RIL did not give any specific dates, international brokerages such as Macquarie Capital Securities India (Pvt.) Ltd and Credit Suisse, after interaction with the management, wrote in their investors’ note on Wednesday that the company is likely to commercially launch Jio in March-April after a delay of one quarter.
“We expect RJio pan-India launch by April 2016. RJio stated that all regulatory compliance measures are in place. Network roll-out has been substantially completed pan-India along with interconnect with all operators across circles," Morgan Stanley Research said in a note on 20 January. “Interconnect of VoLTE calls with 2G/3G networks as well as VoWi-Fi is working well," Morgan Stanley said. VoWi-Fi is short for voice over Wi-Fi, which allows users to make voice calls using Wi-Fi on their mobile devices. Jio is primarily banking on convincing existing and potential users that its voice-over-LTE (VoLTE) network will deliver a much better voice and data service than what its competitors offer. LTE is short for long-term evolution, a mobile telephony technology standard.
VoLTE allows users to make voice calls over the LTE (typically marketed as 4G LTE) network that has higher speed than 2G or 3G ones that were designed primarily for voice calls. It does so by enabling Internet Protocol (IP)-based or data-based calls.
Morgan Stanley said RIL has made capital expenditure of ₹ 1.09 trillion to date for Jio, excluding any spectrum-related payment to Reliance Communications Ltd (R-Com), on account of spectrum-sharing or trading.
On Monday, Reliance Jio Infocomm signed a deal with Anil Ambani-led Reliance Communications to get the latter’s 800MHz band spectrum in nine circles for its soon-to-be-launched 4G high-speed data services.
As part of the deal, R-Jio and R-Com can now share spectrum in 17 circles, significantly enhancing R-Jio’s spectrum footprint. On the same day, Reliance Jio Infocomm said it will raise ₹ 15,000 crore through a rights issue. The brokerage unit of Bank of America Merrill Lynch said Jio’s footprint will expand to 18 circles in 850MHz spectrum after the deal with R-Com against 10 currently, while RIL is in discussion with other operators for tower, spectrum sharing or trading.
“RIL’s ‘LYF’ phone is already available for purchase by consumers, and is available through 40,000 retail outlets and channel partners. The handsets will have dual sim capability and will be available in affordable to premium range. These phones, we believe are exclusively developed for RIL and in case the sales are lower than expected, then the inventory impact will have to be borne by RIL," Motilal Oswal Securities Ltd, in its note on 20 January. “We expect Reliance Jio to disrupt data as well as voice market given its non-legacy infrastructure and zero dependence on voice revenue," it said.
JM Financial Institutional Securities in its note said RIL indicated that trials on its telecom networks are currently being undertaken and they would shortly expand the trial base. It added that 10,000 special consumers are currently continuously testing the network to identify any locations which are not getting proper signals.
“However, based on the tone of the interaction, we believe that RIL intends to not rush in to commercial use which could result into some delay in full ramp-up of the operations all across India," JM Financial said.
India has over 1 billion wireless phones, of which smartphones account for a little over 10%.
According to a 23 November note by research firm International Data Corporation (IDC), the growth in the smartphone market was aided by the rising demand for affordable 4G-enabled devices that “witnessed almost a three-fold increase in unit shipments over the preceding quarter".
RIL, while announcing its earnings on Tuesday, did not make any specific comments on Jio’s commercial roll-out.
RIL said Jio has substantially optimized its network and is currently testing service offerings across the breadth of the country for providing a superior experience to its customers.
“In addition to testing and validation, the end-to-end services are being tested by RIL group employees, channel partners and vendors who are among the first to test the true 4G network experience. User experience and data and voice consumption trends have been very positive. The extensive feedback from trials shall be used to create a compelling service proposition for end customers and optimise all services," RIL said, without divulging details about the commercial launch.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.