Reliance’s $16 billion mobile challenge
Jio Infocomm network being tested, will start services in Dec
Jio Infocomm network being tested, will start services in December.
mumbai — Billionaire Mukesh Ambani said Reliance Industries’ Jio phone service will begin commercial operations in India around December, posing a challenge to incumbents Bharti Airtel and Vodafone Group.
Reliance Jio Infocomm’s network is currently being tested, with a “beta launch” due over the next few months followed by commercial operations towards the end of the year, Ambani said at the annual general meeting on Friday.
The rollout will mark Ambani’s much-awaited return to the telecommunications sector after Reliance Communications was handed to younger sibling Anil Ambani in the wake of a family feud in 2005. Reliance is stepping beyond its traditional oil and gas operations to tap growing voice and data demand in the world’s second-largest wireless market.
Ambani, India’s richest man, said Jio’s first full year of commercial operations will be the 12 months starting April 1, 2016.
The Mumbai-based company has invested more than Rs1 trillion ($16 billion) on its network. It says Jio can help Prime Minister Narendra Modi’s Digital India push to bring rural areas online. Almost 1.1 billion Indians remain offline, McKinsey & Co estimates.
“Our plan is to provide the same power of computing, communication and information to every individual, whether in towns or rural areas, that the US president had 10 to 15 years ago,” Ambani said. “All this at about Rs300 to Rs500 per month.”
Reliance’s entry into the mobile services market comes at a time when India’s wireless operators are paying a record
Rs1.1 trillion
just to keep their networks running
Shares climb
Reliance shares rose 1.5 per cent to Rs889.85 at the close of trading in Mumbai, compared with the S&P BSE Sensex’s 0.2 per cent climb. Bharti advanced one per cent. Idea Cellular gained 1.8 per cent.
Reliance’s entry into the mobile services market comes at a time when India’s wireless operators are paying a record Rs1.1 trillion to keep their networks running. Ambani’s unit said in March it would pay Rs100.8 billion for spectrum it acquired at an auction of airwaves that month.
“The impact on the rest of the industry from Rjio’s launch can be quite significant,” Sunil Tirumalai and Chunky Shah, analysts at Credit Suisse Group, wrote in a May 19 report.
“We retain a cautious stance on the sector.”
Ambani is seeking to offer higher speeds for Internet browsing and data downloads on his fourth-generation network. Lower-priced smartphones are spurring mobile Web access in Asia’s third-largest economy.
Reliance is working with device makers worldwide to ensure availability of affordable smartphones that can operate on the company’s 4G network, Ambani said. Such phones could be available for less than Rs4,000 by December, he said.
Morgan Stanley recently added Reliance to its India “focus list.”
“The key is the telecom business,” Ridham Desai and Sheela Rathi, Mumbai-based analysts at Morgan Stanley, wrote in a note. “The market appears to be assigning no value to this business.” —