Reliance Jio Hopes to Disrupt India Mobile Market

Reliance Jio Infocomm, a challenger in the Indian mobile market,  will begin offering mobile services in five Indian cities by June 2015, with a full country roll-out throughout the rest of 2015.

As you would expect, Reliance Jio Infocomm will focus first on large urban centers, including New Delhi, Mumbai, Ahmedabad, Lucknow, and Nagpur.

As an upstart, Reliance Jio will focus on the next generation of networks and services--fourth generation--in an effort to quickly climb the market share ranks. In part, that is because its spectrum is suited for 4G, and in part because 4G is an easy story to tell.

In some ways, Reliance Jio might remind some of SoftBank. In fact, Reliance Jio might not initially have wanted to both with voice, focusing instead on data services and apps. Voice is viewed as a transition strategy, giving Reliance Jio time to flesh out its “data first” strategy.

Reliance Jio also recently launched its first of several expected 4G applications, Jio Chat, a messaging application that is up against WhatsApp. Though Jio Chat does not strictly require 4G capabilities, it will be part of an application-focused service heavy on e-commerce and other apps for news, games, social and cloud storage.

The Reliance Industries is building on assets including Infotel Broadband, which had won spectrum to launch such services across India, plus spectrum purchased in the recent spectrum auctions.

The company plans to start services in 900 towns initially, according to plan. A company must roll out services across 90 percent of the metropolitan areas where it has won spectrum in an auction and 50 percent of rural areas within five years of receiving spectrum, according to the Telecom Regulatory Authority of India.

Reliance Jio has pan-India 20 megahertz (MHz) under the 2,300MHz broadband wireless access spectrum in 22 circles and 5-7MHz spectrum under the 1,800MHz band in 14 circles.

Debt burdens now will be an issue as firms divert free cash flow to paying interest and amortization on money borrowed to pay for their spectrum winnings. In fact, strategic and tactical issues during the auction might have contributed to the high prices paid for spectrum during the auction.  

Many therefore expect a wave of consolidation, at some point, that would likely reduce the number of leading suppliers from about eight to five.

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