Reliance Jio likely to start operations with Disruptive offers

By: Gizbot Bureau

Reliance Jio, the telecom arm of Reliance Industries, is likely to start its operations with disruptive offers to quickly gain customers, according to a report by Bernstein Research.

Reliance Jio likely to start operations with Disruptive offers

"We expect Jio will launch disruptive offers that stall key competitors' growth and dampen existing market expectations," the report said.

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It stated that the market entry of Reliance Jio is one of the biggest controversies in the Indian telecom space. "For a market where competitive pressures are finally starting to ease, the spectre of a new 'well-funded' entrant is worrying."

Jio will be launching services with a new technology promising significantly faster data speeds than existing 3G services.

Reliance Jio likely to start operations with Disruptive offers

"We believe an organic strategy could yield about 10 percent subscriber and 9 percent revenue share over 10 years," the report said.

"While any aggressive action is likely to impact all players, Bharti is well positioned with its own 4G spectrum to 'match' any offer. Vodafone may need to scramble to accelerate their 4G network deployments but should eventually be able to follow in the higher-value metro circles; although it is lacking in spectrum in the others," it stated.

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"We expect Jio's entry to be disruptive. Having spent $13 billion on building a network, Jio needs to get to scale in order to move to cashflow positive operations," the report said.

A disruptive entry, bringing down market expectations (and pricing), as well as relaxation of spectrum trading/sharing rules, could be catalysts for greater mergers and acquisitions, the report explained.

"We expect both Bharti and Vodafone to accelerate their data propositions in response - deploying more 4G and matching Jio's data pricing model while playing up their superior voice coverage and quality. In the long-run consolidation should result in a better market structure for the remaining scale players -- Bharti, Vodafone and Jio.

"We are less optimistic regarding Idea Cellular's ability to adapt and compete in this environment and advise investors to reduce their holdings," it said.

Source: IANS

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