India’s second-largest mobile operator, Vodafone, rolled out its high-speed 4G service in Kochi in Kerala on Tuesday, making it the country’s second 4G service provider after market leader Bharti Airtel, which had unveiled its plans in April this year.
The Mukesh Ambani-led Reliance Jio is expected to introduce its bouquet of 4G services later this month.
Vodafone, with investment exceeding Rs 1.11 lakh crore since its entry into India in 2007, plans to intensify its 4G rollout in the four metros – Mumbai, Delhi, Bengaluru, and Kolkata in the first phase by December-end or before Reliance Jio’s foray. Reliance Jio has reportedly pumped in approximately Rs 1 lakh crore into its 4G plan.
Reliance Jio declined to comment for this story.
Sunil Sood, MD and CEO, Vodafone, said: “Vodafone’s global expertise and experience of launching 4G across 19 countries gives us a better understanding of this technology and the needs of the 4G customer… we are delighted to launch our ultrafast 4G services in India that will give customers the power to experience the most advanced wireless broadband experience available across the globe today.”
Last week, the Sunil Bharti Mittal-led Bharti Airtel, India’s largest telecom operator announced investments of Rs 60,000 crore or 60 per cent of Reliance Jio’s investments over the next three years to significantly increase its network capacity and ability to offer voice and high-speed data services.
The company has invested over Rs 1.6 lakh crore over the last two decades, of which Rs 1.1 lakh crore was invested in the last five years, according to its India & South Asia chief executive Gopal Vittal. The company’s 4G network spans 334 cities in India.
In November, the Kumar Mangalam Birla-led Idea Cellular, India’s third largest mobile operator, bought Videocon’s spectrum in two circles for Rs 3,310 crore. It plans to invest Rs 18,000 crore more for its 4G rollout in the first half of 2016, according to industry estimates.
Existing 3G players such as Bharti Airtel, Vodafone, and Idea are looking to cannibalise their 3G customer base to add 4G subscribers. Reliance Jio is expected to offer unlimited high-speed data for a monthly bill of Rs 500. “It is going to be a bloodbath in the 4G sector,” a market analyst said.
A recent Fitch Ratings report said the 2016 credit profiles of the top four Indian telcos would come under pressure amid tough competition, larger capex requirements, and debt-funded mergers and acquisitions.
Competition
“The intensified competition will stem largely from the entry of Reliance Jio. We see the industry blended tariff falling by 5-6% as Jio’s entry will arrest the rise in data average revenue per user (ARPU) despite rising data usage, and as voice ARPU continues to fall due to cannibalisation by data,” the report said.
“Reliance Jio’s Rs 1-lakh crore investment is mostly funded with debt. It will take three to five years to break even, as Rs 24,000 crore will go towards depreciation and interest costs,” a Mumbai-based analyst said.
