RIL lays down marker for telecom return

Reliance Industries Ltd (RIL) chairman Mukesh Ambani on Sunday announced the company’s re-entry into the telecom business by unveiling a fourth generation (4G) service for its employees.

Ambani didn’t disclose when commercial operations will begin.

The roll out of the service marks Mukesh Ambani’s official return to the telecom sector after RIL’s telecom unit was handed to younger brother Anil Ambani as part of a settlement to split the family business founded by their father. The re-entry into the telecom business is also likely to intensify competition for incumbents, particularly in the lucrative data business.

Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd are the only companies who have commercially launched 4G telecom services in India.

Reliance Jio Infocomm Ltd (R-Jio)’s 4G services will now be available to roughly 120,000 employees, their families and business partners from Monday, which is also the 83rd birth anniversary of RIL founder Dhirubhai Ambani.

“Jio is not about technical brute force but to reimagine how to do things better,” Ambani said in his address at the launch ceremony. The motivation behind Jio, he added, is to bring India’s population of over 1.2 billion under the digital umbrella.

The entry into the telecom business is Ambani’s biggest bet in a consumer-centric industry after RIL’s entry into organized retail, whose profits are still meagre after nine years of operations.

The firm has invested close to $15 billion in the telecom venture so far, but analysts have been wary of the company’s ability to generate positive returns for at least the next five years in the absence of clarity on the business model and subscriber addition strategies.

“The degree of Jio’s commercial success will depend not only on the product offering, pricing, and user experience, but also on the ability to transition subscribers fast enough to 4G handsets,” said a report by Citi Research, a division of Citigroup India Pvt. Ltd, on 21 December.

Sunday’s launch is the last step towards a pan-Indian commercial launch and clears the air of uncertainty over timelines, but the quality of service will be the real litmus test for R-Jio, said a telecom consultant, who did not wish to be identified as R-Jio is his client.

Company officials had indicated that a commercial launch will take place in the second half of the next fiscal.

The company will use the current launch to iron out technical issues before the commercial launch.

“By throwing open the Jio services to all its business partners, and its vast number of employees and their families spread all across India, RIL will be making the optimal use of human resources to ensure that the last and the slightest wrinkle would be smoothed out to perfection before Jio launches its all-India commercial services,” said a company note issued on Sunday.

R-Jio holds the highest amount of liberalized (free to use for any service) spectrum among telecom operators, totalling 51.1MHz across the 800MHz, 1,800MHz and 2,300MHz bands. It has spectrum in the 2,300MHz band across all 22 circles, in the 1,800MHz band across 18 circles, and in the 800MHz band across 10 circles. R-Jio is in talks to share Anil Ambani-led Reliance Communication Ltd’s 800MHz band spectrum across seven circles. R-Jio has also launched its own brand of 4G phones called LYF, so far available to company employees.

Some telecom experts have doubted the company’s ability to offer voice-based calls due to its heavy dependence on the 2,300MHz band, which does not support voice calls. This was described as the company’s biggest weakness because of the fact that while other operators who were preparing to offer 4G services, including Bharti Airtel and Idea Cellular, can fall back on their 2G and 3G spectrum, R-Jio lacked that option.

Therefore, the company planned to offer voice-based calls through its high-speed 4G services, called VoLTE, or voice over LTE.

LTE—or long-term evolution—is an international standard of high-speed communication for the transmission of 4G signals.

“R-Jio has not mentioned anything about the service in detail. However, now since the employees and partners have access to the service, it will be interesting to see whether the service is good, especially the voice-based service. A good voice-based service will be the company’s main differentiator,” said the telecom consultant cited earlier.

Brokerage Credit Suisse (India) Pvt. Ltd in a note released on 14 December said that the network under testing phase works better than Bharti Airtel’s 4G network, but that this could also be because the 4G network itself is not populated enough currently.

The brokerage conducted a test of the two companies’ services recently.

Mukesh Ambani, in his address, spoke about the philosophy behind the Jio brand, under which the 4G services are being launched.

“I want all of you to take five things back: digital life, connected intelligence, Jio life, Jio together and Jio celebration,” he said.

Nita Ambani, board member of RIL and Mukesh Ambani’s wife, said, “We will use Jio to deliver health and education across the country. It will break the rural-urban divide.”

The launch at the Reliance Corporate Park, the company’s campus at Navi Mumbai, was attended by 35,000 employees of the company directly and over 80,000 employees through video conferencing from offices across the country and abroad.

The service was flagged off by film actor Shah Rukh Khan, who is also the brand ambassador of Jio—the brand name under which the telecom service will be launched.

Musician A.R. Rahman also performed at the Reliance Jio launch event.