Will the commercial 4G launch of Reliance Jio lead to negative revenue growth for the Top 3 telcos? Will Reliance Jio get 40 percent of the share, as predicted by a leading analyst?
No doubt, RJio has already invested Rs. 71,350 crore of the Rs. 100,000 crore set aside. It has operating licenses for 2300 MHz in all 22 circles, and is expected to roll out services nationwide. Jio will definitely stir up things, but it will still be a new entrant and conquering the space may not be a cakewalk.
It is being pitched against companies that are incumbents in their own right.
Airtel, Vodafone, and Idea have already launched 4G and are scaling up rapidly. They are stepping up their CapEx and have the first mover advantage. Bharti Airtel has invested Rs. 40,000 crore in launching 4G services in 296 cities. Vodafone has pumped in Rs. 17,000 crore and Idea Cellular, with a planned investment of Rs. 18,000 in the first half of the year, has acquired Videocon's spectrum in Gujarat and UP (West) for Rs. 3,310 crore. The telcos are gearing themselves up.
In the meantime, conclusion of the third quarter signals continuing momentum, sustained efficiencies, and margin expansion on an underlying basis.
Input cost for the telecom sector is increasing, including spectrum, CapEx, and network running OpEx. To sustain the health of this sector, prices will need to be increased by service providers in the medium to long term. These rate adjustments may not follow a linear trajectory but there will be need for a disciplined approach in pricing to fund the activated CapEx spectrum.
Increased data consumption on handheld devices is driving growth in the mobile services market, whose total revenue is expected to enjoy a CAGR of 5.2 percent and reach Rs. 2.3 lakh crore in 2017. The 3G subscriber base could achieve the highest five-year CAGR-a whopping 68 percent. Mobile consumers are also demanding faster services.
All antecedents seem to indicate India is now on the cusp of a digital revolution.