Tuesday, February 6, 2018

Reliance Jio continues its rapid rise

by James E. Carroll

How fast can a network grow from zero to 160 million subscribers? Ask Reliance Jio, the brainchild of billionaire investor/entrepreneur/tycoon Mukesh Ambani and his Reliance Industries Ltd.
Reliance Jio only first launched commercial service on 5th September 2016.

Its market debut has been described as an earthquake for the Indian telecoms market, and the start of a price war that is drawing the casualties from the nation’s twelve mobile operators. In addition to cut-rate tariffs and the promise of unlimited LTE mobile data for an extended period, the company tapped into the energy and graces of Prime Minister Narendra Modi. Chairman Ambani even dedicated the new company to “”realising the Prime Minister’s inspiring vision of Digital India for 1.2 billion Indians. Despite this connection, Jio immediately drew complaints from other operators for what they saw as anticompetitive behaviour.

From the starting line on 05 September 2016, Jio rocketed ahead to become the fastest growing mobile operator ever seen. In the first month, Jio enrolled 16 million lines. The 50 million threshold was passed on the 83rd day. The 100 million milestone came on 22 February 2017. As of 31 December 2017, Jio passed the 160 million subscriber milestone, adding 27 million gross user lines in the fourth quarter alone.

As the Indian market tends to experience greater churn rates and a higher percentage of prepaid users, Jio’s net additions for the quarter amounted to 21.5 million.  In Q3 2017, the company enrolled 19.5 million lines, indicating that Jio’s remarkable clip continues.

Six months after launch, the Telecom Regulatory Authority of India (TRAI) ordered Jio to withdraw the 3 months complimentary, unlimited mobile broadband offer for new subscribers, arguing that such a generous offer distorted the market.

This week, Reliance Jio is reporting its second quarterly profit in its brief history and even as it continues to spend aggressively to build out its network.

For its most recently fiscal quarter, Reliance Jio reported standalone revenue from operations of  6,879 crore  rupees  (US$1.7 billion), and up 11.9% over trailing quarter. Standalone EBITDA  amounted to 2,628 crore rupees (US$411.8 million) and the EBITDA margin was 38.2% (trailing quarter at 23.5%).  Standalone net profit amounted to 504 crore rupees (US$78.9 million).
Before we become too enamored of this operator, it is critical to note the very low ARPU levels in the Indian telecoms sectors compared to those in developed economies.

Jio’s average revenue per user per month is just154 rupees (approximately $2.41)  

At these levels, continued investment in the latest generation of imported networking equipment will require commitment from the parent firm, Reliance Industries, or the emergence of adjacent opportunities, such as mobile banking or shopping services that could be commercialized with the very large subscriber base.

Additional metrics disclosed by Jio

  • World’s largest mobile data consumption network – first Exabyte network in the world
  • Total wireless data traffic of 43,100,00,000 GB (9.6 GB per subscriber per month) 
  • Total voice traffic of 311,130,000,000 minutes
  • Video consumption has crossed 2,000,000,000 hours per month on the network (13.4 hours of video consumption per subscriber per month)
  • On track to achieve 99% population coverage during the year
  • Only network to deploy pan-India 4G across the 800MHz/ 1800MHz/ 2300MHz bands 
Acquiring more infrastructure

Earlier this month, Jio agreed to acquire network infrastructure assets of Reliance Communications Limited and its affiliates. Jio was the winning bidder in a sale mandated by the lenders of Reliance Communications.

The sale includes assets under four categories – Towers, Optic Fiber Cable Network, Spectrum and Media Convergence Nodes, specifically:

122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands
Over 43,000 towers, amongst the top 3 independent tower holdings in India
~ 1,78,000 RKM of fiber with pan India footprint
248 Media Convergence Nodes, covering ~5 Million sqft used for hosting telecom infrastructure

The deal was valued at US$$3.77 billion, according to media reports. Reliance Communications said it will use the proceeds for debt repayment and that it retains its other businesses including its enterprise networking practice, its data centers, and its subsea cable network.

Jio’s management said the assets are strategic in nature and are expected to contribute significantly to the large-scale roll-out of wireless and Fiber to Home and Enterprise services in India.

Here’s what we know about Jio’s physical network. 

The Jio All-IP digital platform is built on Cisco’s Open Network Architecture and Cloud Scale Networking technologies featuring IP/MPLS, spanning areas including Data Center, Wi-Fi, Security and Contact Center solutions. Jio has laid more than 185,000 miles (or 300,000 KM) of fiber, and built India’s largest cloud data center to build platforms for applications and vertical solutions. Cisco claims a leading role at this layer of the network.

Nokia provided optical core and metro solution for Reliance Jio Infocomm's (Jio) pan-India 4G LTE network to support traffic growth created by the operator's initiative to deliver broadband connectivity for all of India.  As part of this deployment, Nokia is providing a 100 Gbit/s transport network that spans 90,000 km designed to enable Jio to offer high-capacity broadband services to underserved regions throughout India, as well as support nationwide long-distance (NLD) service.

In March 2017, Ericsson announced that it was providing its OSS fulfilment suite as part of Jio's broadband network deployment.

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