Subscriber additions, while suppressing incumbent telecom operators, will continue to remain top priority, say analysts
Mukesh Ambani-led Reliance Industries Ltd (RIL) is likely to invest another Rs 600 billion this year in its telecom business Reliance Jio Infocomm with an emphasis on faster rollout of broadband services and wireless expansion, Livemint reported, quoting anonymous company sources.
The sources have also been quoted as saying thatmight borrow up to Rs 1 trillion in addition to the above-mentioned investment. Jio and RIL spokespersons did not comment on queries about the investment.
“Management made it very clear that their focus in the near term is to retain and grow their subscriber base and they would respond to market pricing. Essentially the implication was that incumbents would need to raise tariffs, but this would effectively lead to loss of market share for incumbents as JIO would offer the best ‘value’ to subscribers and hence continue to see large subscriber additions,” noted JP Morgan in their recent report on RIL.
The report further stated that JIO is expected to launch its broadband business with a pricing strategy similar to that of its telecom arm, given its focus is on creating a new market.
While JIO’s average revenue per user (ARPU) fell to Rs 137 from Rs 154 in the last quarter of 2017-18, it still remains better than that of Airtel and Idea cellular. JIO also managed to add almost 9 million subscribers during the quarter.
“Jio is expected to remain aggressive to gain market share, which could keep industry revenue under pressure and return ratios of incumbents suppressed,” noted an India Equity Research in a report on Monday.
JioFiber, the wired broadband arm, has started offering what they claim to be ‘ultra-high-speed’ fibre to home (FTTH) broadband connections with 1.1 terabytes (TB) of free data at speeds of 100 megabits per second (mbps) in select markets in the country already. However, commercial services are likely to be rolled out in the second-half of the year.
The company currently claims more than 300,000 km of optical fibre network in the country and the company is expected to target over 100 million households across the country with the service.