RIL chief Mukesh Ambani ventured back into the Telecom Space by investing the surplus generated by his company in Oil / Energy Sector. In a presentation to Analysts, Reliance Industries Ltd has presented a fairy tale [Telecom is no F**ing Joke] Here are the views of Top Telecom Analysts on RIL’s re-entry into telecom space,
Reena Verma Bhasin from BOFA-Merrill wrote,
Recent attempts like foray in organized retail and SEZ have not really taken off. The re-entry in to telecom may be another effort to reduce cyclicality of RIL’s earnings. RIL’s telecom foray may start being included in sum of parts valuation once there is clarity on business plans and execution time-frame.
Goldman Sachs Analysts wrote,
RIL’s entry strategy remains unclear in a untested domain of emerging technology and developing ecosystem; 2) RIL’s data services will likely need strategic tie-ups with various suppliers for content, connectivity and device; 3) there will be 5-7 data providers in every telecom circle indicating likely stiff competition on pricing going forward; and 4) overall capex needed for pan-India roll-out could change depending on evolution of TDD LTE. RIL also indicated it is not interested in acquiring legacy networks or in entering the traditional voice space.
Edelweiss analysts Niraj and Ruchi wrote,
RIL’s strategy of entering into broadband wireless probably emanates from: (1) its urgent need to deploy huge cash; (2) lower opportunity cost of capital; (3) intention of providing alternative solutions to the existing voice services. Break-even may happen only in 3-4 years.
Kotak Anlaysts wrote,
We are disappointed with RIL’s decision to invest in the Indian telecom sector; there are enough opportunities in the global E&P arena. It remains to be seen if RIL will restrict itself to a presence in BWA or enter other areas including Voice. We note that RIL’s first entry into telecom was not very successful.
Anad Rathi Analyst Sanjay Chawla wrote,
While entry of a strong/committed player with clout, is incrementally negative for the sector, we don’t see any risk to incumbents, at least for the next 2-3 years, given RIL’s BB focus and long project gestation. Furthermore, like other new entrants, RIL faces late mover disadvantage; besides, it lacks a proven track record in consumer-centric businesses.
Following RIL’s announcement, here is another fairy tale newspaper – The Economic Times carrying an article about possible Wireless Broadband Tariff War which is nothing short of a Joke. Whether its RIL by Mukesh Ambani with his over-hyped Retail ventures or the younger flamboyant scion – Anil Ambani running the RCom business , both have been failures in running consumer centric businesses as there are no Sarkari Babus / Netas here to lend a helping hand under the disease of corruption.
2 viewpoints here:
RIL’s late entry into an unrelated ( Not E & P)industry makes us wonder does RIL have competitive advantage here? Since its not going to enjoy first mover luxuries, is there any other factor that the group plans to bank on, which would give it a competitive edge?
More importantly, as a layman,I am bound to question how this affects the customer?
I think, Mukesh Ambani shuud start with a brand name of “WireLess” it will boom like anything.