Reliance Jio Infocomm is likely to post $1 billion revenue during the current financial year (2016-17), said Morgan Stanley.
Jio, which will have more than 30 million subscribers by the end of this financial year, will be doubling user base to 60 million by the next, with 1.3 times to 1.8 times higher ARPU than the industry level.
Reliance Jio Chairman Mukesh Ambani already said the company has half a million 4G customers on its network for trials.
The forecast by Morgan Stanley is based on the anticipation that Reliance Jio will launch its 4G services over the next 3-9 months after an investment to date of over $19 billion. Reliance Jio is expected to launch 4G before December 31, 2016, according to telecom industry sources.
Since Reliance Jio will be launching the 4G services by the end of the calendar year, the Mukesh Ambani-promoted telecom venture will be generating the estimated $1 billion revenue from nearly three to six months.
For comparison, Bharti Airtel generated quarterly revenues of Rs 17,694 crore (+11.6 percent) revenue from India during the third quarter of fiscal 2016.
Airtel’s revenue was led by increase of 10.1 percent in mobile, 19.1 percent in airtel business and 19.1 percent in Digital TV.
Mobile data revenues of Bharti Airtel was Rs 3,184 crore (+50.6 percent) fuelled by 29.9 percent increase in the data customer base and 73.3 percent surge in traffic. Data ARPU of Airtel increased to Rs 200 (+Rs 30) — led by 35.5 percent increase in data usage per customer. Mobile Data revenues contribute to 23.1 percent of Mobile India revenues against 16.2 percent in Q3 fiscal 2015.
Morgan Stanley says Capex (capital expenditure) spend is to be front-ended, expected at over $4.5 billion in 2016-17 — thus (it) would take the total investments into the venture to over $23 billion into the launch, among highest in the industry.
According to Morgan Stanley’s estimates, Reliance Jio will launch 4G in early second half of 2016. However, if the launch gets delayed to late 2nd half of 2016, it would mean incumbents could have a better operating environment in the short term.
If Jio launch is delayed to late 2016, Bharti Airtel is best positioned to gain. It is spending annually over $2.5 billion in domestic wireless capital expenditure and by far has the highest 4G coverage among the incumbents. Bharti Airtel inked spectrum deals with Videocon Telecom and Aircel to expand its 4G presence.
“Management suggested the current test program is to be upgraded into commercial operation in the coming months, which means Reliance Jio would already have a couple of million subscribers into the launch,” Morgan Stanley said.
Reliance Jio has launched four models of 4G enabled handsets with price range of between Rs 6,000 and Rs 19,000.
More than 50 percent of smartphones shipped are LTE-enabled. Currently more than 45 million 4G handsets are estimated to be in the market out of 250 million smartphones.
Out of that around 150 million 4G models are available in the market with 60 of them below a price tag of Rs 12,000. The average selling price of such 4G smartphones has also fallen from more than Rs 25,000 a year ago to around Rs 10,000.
What is awaited is for the company — which on its own has 850 MHz spectrum in 10 out of 22 circles — to integrate itself with the 800 MHz spectrum of Reliance Communications, as per their pact for trading in nine circles and sharing in 17 circles, IANS reported.
