Reliance Jio Infocomm has just crossed the first hurdle by announcing a Rs 1,200 Cr deal with Reliance Communications where the latter will offer its Nationwide Inter-City Optical Fiber Network for Reliance Jio.
Reliance Jio will utilize multiple fiber pairs across RCom’s 120,000 Km Inter-City Fiber Network to provide a robust and future-proof backbone for rolling out its state of the art 4G services. RCom will have access to OFC capacities built by Reliance Jio.
However, just a one time fee of Rs 1,200 Cr for 120,000 Km OFC network is a steal, Reliance Jio got in my opinion as building a similar network of this scale would cost the company a fortune.
According to Sources, this is just the first announcement and both of them are expected to announce an arrangement for Intra-City OFC Sharing along with Towers and other Related Passive Infrastructure.
Reliance Jio Infocomm does not have a Data Only Business Model in India for the next few years. So if 2G Voice is a must, why can’t Reliance do a CSFB arrangement with an existing operator ? It could tie up with existing 2G/3G operators to offer voice calls using CSFB. However, we doubt if a voice business can run completely on leased capacity especially in a spectrum-starved situation such as the one in India.
The other possibility is that Reliance Jio Infocomm builds out its own 2G network by acquiring spectrum in the upcoming auctions (or by acquiring an existing operator). Thus, Reliance could have an underlying 2G network to drive coverage (essential for voice service) and have an LTE network as an overlay on this 2G network. Reliance has lobbied hard with the Government and will soon acquire a UASL required to provide voice service paying Rs 1,650 Cr.
Is Videocon Really Front End Company for Reliance Jio ?
As whispered in market circles, Videocon is the front end company for Reliance Jio building a 1800Mhz Voice and FDD-LTE network but chose to bid selectively and is likely to expand its presence in subsequent Spectrum auction and establish a nationwide foot print. Now if Reliance Jio was front end company why would Reliance separately pay Rs 1,650 Cr UASL License fees when Videocon has already paid the same ?
Mukesh Ambani and His Clout in manipulating Policies In the past, Reliance has been able to manipulate Government policies from Polyester & Petrochemicals  to CDMA Mobile Service launch  to stay ahead of competition. However, chances are bleak this time as Mukesh has an enemy within and many outside. With the nation losing trust in the Corrupt UPA Government after the Multi Billion Dollar 2G Spectrum Scam, the writing on the wall is clear – Any Biased Decision especially on Spectrum will land in the Court of Law with a long and tedious battle for all stakeholders. Chances are high that M&A rules may still be rigged in favor of Reliance Jio but Seller will command an exit premium.
In this backdrop, Reliance Jio Infocomm has Herculean tasks ahead – Network & Tower Rollout, Evolving eco-system of 4G-LTE, Lack of International Bandwidth and fierce competition from Airtel, Vodafone, Idea Cellular, DoCoMo and Reliance Communications on all fronts.
The 3G Momentum has just picked up in China. China Mobile [CM] has continued to expand its TD-LTE trial network, and targets to have 200K BTS by the end of 2013. In 2012, the company expanded the trial to a total of 13 cities. CM’s pre-commercial TD-LTE trials were conducted on MiFi and router devices. Since TD-LTE supply chain is lagging the FDD-LTE supply chain by a year, do not expect the TD-LTE chipset supply chain to mature before 2014 and the Chinese government may issue 4G commercial licenses only by end of 2013. CM will consider focusing on subsidizing the high-end segment only after the launch of 4G / TD-LTE.
China Mobile is faced with the challenge for TD-LTE as it is in the high frequency band (2500-2690MHz), as operators will likely face coverage and indoor penetration issues. Softbank in Japan and Clearwire in the US, have indicated a slowdown in TD-LTE network rollout in recent months. Softbank started to roll out a parallel FDD-LTE network after the company acquired a FDD-LTE spectrum, especially around the launch of iPhone 5, compatible with FDD-LTE. Continue reading How is China Developing on the 4G LTE Opportunity ?
Data from Global Mobile Suppliers Association (GSA) suggests that one third of today’s 96 commercial LTE operators have deployed 4G / LTE using the 1800MHz spectrum in their networks. The benefits are many, as the coverage area is 1.5x – 2x compared with deploying the 2.6 GHz band and there is a possibility of re-using network assets – antenna cables of GSM1800 or WCDMA HSPA 2100.
The Following chart Shows the Advantages of 1800MHz LTE Continue reading 1800MHz Band Matured for 4G / LTE – Will Idea & Vodafone Bid ?
TRAI has released its recommendations on advanced wireless broadband services in the 700MHz band. Key recommendations are,
- FDD to be used in 700Mhz.
- Spectrum available is 698-806Mhz.
- A 45x2MHz configuration recommended in the 700MHz band. This effectively implies that only one operator (new/old) can win the spectrum.
Continue reading TRAI Recommendations on IMT Wireless Broadband in 700MHz – Impractical
Idea Cellular, third Largest Wireless Service Provider in India on the basis of Revenue Market share has some interesting insights to share. The company has a gap between current (34 paise) and headline (43 paise) voice RPM will continue to narrow as promotional offers keep declining at a faster clip with reducing competition.
Idea currently loses Rs 135 mn per day on promotional offers (due to 9 paise lower RPM compared to headline tariff). As promotional offers are being gradually withdrawn (from August 2012), the share of dual SIMs in the industry has been declining (1.15x vs. 1.3x a year ago). Also, with declining competitive intensity, minutes will migrate from marginal players to old operators as price arbitrage reduces. Continue reading Idea Reducing Promotional Offers, Positive on 3G, 4G LTE Only On Right Spectrum