2015 launch for newcomer Reliance offers temporary relief to incumbents

2015 launch for newcomer Reliance offers temporary relief to incumbents

24 JUN 2014

Reliance Jio Infocomm’s decision to hold back its 4G launch until next year lets India’s existing operators off the hook but is only a brief respite, say analysts.

A report by brokerage CLSA maintains a buy rating on Bharti Airtel – the country’s leading operator – because a delay from Reliance aids existing players, according to Economic Times.

In addition, the report said: “Reliance Jio continues to face significant challenges from an immature 4G-device ecosystem and have difficulty offering voice plus data.”

Such opinions might calm some nerves following Reliance Industries’ AGM last week where chairman Mukesh Ambani (pictured) said next year’s 4G launch will cover 5,000 towns, or 90 per cent of the country’s urban areas, as well as over 200,000 villages.

Ambani also outlined a hefty INR700 billion ($11.6 billion) investment in the newcomer’s plans.

Although never stated officially, the mooted launch date for Reliance has been later this year so 2015 releases a little pressure on the incumbents – at least for the moment.

Meanwhile bank Credit Suisse is holding onto a negative stance on India’s mobile sector despite the delay. Holding off a few months does not materially alter the situation for existing operators, it said.

The scale of the new entrant’s ambition is reflected in a statistic from the bank which says Reliance’s investment at launch could be more than rival Idea Cellular’s entire outlay to date, or two-thirds the size of Bharti’s.

In fact, Reliance’s coverage at launch could be comparable to what Bharti has now, some years after launch, said CSFB.

Reliance has already started field trials and will expand them from August. Trials will continue until the end of the year, or into early 2015 as it readies its 4G service for commercial launch.

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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