Reliance / Mukesh Ambani is well known to influence the Indian media [Reference Nira Radia Tapes]. Anyway, our interest is Broadband and lets see if their new story of Rs 10 / GB of Wireless Broadband is doable.
Today’s ET reports that Reliance 4G LTE will be offered at Rs 10 / GB, a tenth to fifth the cost at which other operators are offering broadband services on competing technologies [ 3G / EVDO]. Reliance / Infotel Broadband have paid close to USD 2.2 Bn for the Spectrum and yet have a steep uphill task of getting the network up and running which will cost them another $2-$4 Bn [RIL’s 4G Spectrum is in 2300 MHz band, not so efficient compared to 700MHz] assuming they cover the broadband affluent 600 Mn Indians. Add to this $1 Bn Operational cost. So they would have spent approximately $7Bn or ~Rs30,000 Cr.
Now lets assume that they squeeze the last drop of blood from Qualcomm and make the Device Eco-system [chips / dongles/ etc] affordable to consumers. Lets further assume that Reliance 4G gets 60 Mn subscribers [based on NTP 2011 targets – their are other competitors as well] each consuming 10 GB of Data / Month. So the bill rate / subscriber is around Rs [1200 + 300 Other Charges Operators Normally levy il-legally] = Rs 1500 / Year. RIL will have a top-line of Rs8000-9000Cr. Even for them to break even it will take 3 to 4 years.
Since RIL is milking the Indian Government at KG-D6 Oil basin, Ambani Insider Trading in his own shares, we will not be surprised if he chooses to offer Rs 10 / GB as he can afford to. I simply love Ambani’s LTE 4G at Rs 10 / GB Media Bomb as 3G prices are way too high for the consumer to afford and hopefully 3G Prices fall by atleast 50% within the next 6 months.