The tearaway growth of 4G in China has led to a drop in device prices, which ‘will help an aggressive new entrant R-Jio’, states the Credit Suisse report. Photo: Bloomberg

New Delhi: If the numbers in the world’s largest telecom market are anything to go by, Mukesh Ambani-promoted Reliance Jio Infocomm Ltd (R-Jio) will do better than initially expected, telecom analysts at Credit Suisse Securities Research and Analytics predict in a new report.

R-Jio is expected to launch services by the end of the year, using a combination of technologies to provide high-speed wireless data services.

It’s the only telecom firm with 2,300 MHz spectrum, needed to offer the TD-LTE (time duplex-long-term evolution) variant of 4G, or fourth-generation, mobile telephony technology across all 22 circles in India.

R-Jio also has 800 MHz spectrum in 20 circles and 1,800 MHz band spectrum in 14 circles. The company is reported to be putting together an integrated technology ecosystem, combining all the airwaves, to provide high-speed, wireless data services across the country.

According to the Credit Suisse report released on Monday, its revision of estimates for R-Jio was based on the faster-than-expected growth of the TD-LTE in China.

The tearaway growth has led to a drop in device prices, which “will help an aggressive new entrant R-Jio, and prove detrimental to incumbents Bharti Airtel Ltd, Idea Cellular Ltd and Reliance Communications Ltd,” stated the report co-authored by Credit Suisse telecom research analysts Colin McCallum, Sunil Tirumalai and Chunky Shah.

A key indicator of the maturity of a technology is the price of end-user devices.

“The handset ecosystem is extremely strong now, with 418 TD-LTE models available, at an average price of RMB 1,499 ($241), and with the cheapest handset now priced at only RMB 299 ($48),” the report stated.

“With good network speeds and performance, and with plenty of handsets at attractive price points, we are revising up our December 2015 TD-LTE (4G) subscriber forecast for China Mobile by 10.4%, from 240 million to 265 million,” the report added. “At the latest price points, TD-LTE smartphones can address a subscriber base accounting for 70% of industry revenues. R-Jio is, therefore, set to be a very strong competitor…”

As reported by Mint on 26 June, R-Jio is expected to follow the China Mobile model closely.

The Credit Suisse report said so as well. “TD-LTE has proved to be a ‘game-changing’ technology shift in China, providing incumbent China Mobile with a working data network. This is facilitating improved data monetisation, particularly as compared with its WiFi network. It is also allowing China Mobile to slow the loss of both subscriber and revenue share,” stated the Credit Suisse report.

“We also expect TD-LTE to be a game-changer in India, for quite different reasons. Specifically, TD-LTE has allowed a new entrant to utilize a large, until now unused, spectrum resource to enter the market. We expect this to have a negative impact on the incumbent operators, in the shape of upward revisions in spectrum costs and capex costs (some of which have already occurred) and downward revisions in revenue forecasts and Ebitda margins (most of which is yet to come). The success of China Mobile’s TD-LTE network over the past 12 months confirms our view that R-Jio can be a meaningful threat to Indian incumbents, and the sheer size of the ecosystem now supporting China Mobile’s 720,000 TD-LTE BTSs (base transceiver stations—commonly referred to as telecom towers) and 170 million handsets/customers can now be leveraged by R-Jio for a full commercial launch in the coming months,” the report added.

Another key question hanging over the use of 2,300MHz-based 4G technology is the strength of the frequency.

As a rule of thumb, the higher the frequency, the lower the signal strength, despite the higher data delivery speed. But R-Jio seems to have this covered.

The Credit Suisse report predicts that at launch, R-Jio will have about 70,000 BTSs in place, and will have the second highest capacity of any Indian network (at 74% of Bharti Airtel Ltd’s network size).

R-Jio declined to comment on the story.