Indian newcomer Reliance Jio Infocomm is likely to further delay the nationwide launch of its long-awaited 4G network until the end of the year, according to two investment firms.
Bank of America Merrill Lynch said in a client note that Jio will likely delay its 4G launch until “it is confident of creating a strong first impression, both in terms of network quality and customer experience”, the Economic Times reported. The note said that the delay would make it increasingly difficult to attract high-value customers from rivals unless it cuts data tariffs.
Bharti Airtel, Vodaone India and Idea Cellular have aggressively expanded their 4G footprints. Market leader Airtel has launched 4G in 15 regions, while Vodafone India offers 4G service in five service areas and Idea offers it in ten.
Jio said in early January, after multiple delays over the past ten months, it would officially launch 4G service across the country by early March. The operator reportedly delayed the launch as it had not yet reached its targeted population coverage.
Bank of America Merrill Lynch noted that a delay until December would allow Jio to offer 4G service in between 60 per cent to 70 per cent of cities and avoid a phased launch, which would give its rivals an opportunity to “defend their turf”.
IIFL Institutional Equities also expects Jio to push back the national launch until December, noting that the timing depends on the merger between Reliance Communications (RCom) and Sistema Shyam Teleservices (SSTL), which is waiting for regulatory approval. RCom announced it November it would acquire its smaller rival, which operates under the MTS brand, through a stock swap.
In January RCom said that it would share its 800MHz spectrum with Jio in 17 regions. RCom also plans to share 800MHz spectrum in the remaining five circles. Spectrum sharing will give RCom access to a wider band of spectrum and Jio’s network to provide faster 4G data services and provide capex and operating costs savings.
IIFL reckons that Jio will be able to use RCom’s spectrum only towards December since it can share and trade spectrum with Jio only after obtaining alternative 800MHz frequencies through a merger with SSTL, the Times reported.
America-Merrill Lynch noted a delay would give the 4G handset ecosystem time to mature, since only 15 per cent of smartphones sold in India support VoLTE and the 800MHz band. But it would also give rivals an additional eight months to expand their 4G networks and migrate customers over and make data tariffs more competitive.
Jio, which now has 25,000 employees, is the first operator to obtain a pan-India unified licence, holding 751.1MHz across the 800MHz, 1.8GHz and 2.3GHz bands in multiple regions, and has invested a reported $15 billion in the rollout.