A report by Bank of America Merrill Lynch (BofA ML) claims that a delay in Reliance Jio Infocomm’s 4G rollout plan will result in big gains for Airtel, Vodafone and Idea. The study also predicts India will have 9 crore 4G users and 18 crore LTE-ready phones by FY 2018.
Sachin Salgaonkar, Karan Parmanandka and Simon Dong-je Woo, the BofA ML researcher analysts, think the insignificant difference between 3G and 4G rates within the next couple of years combined with lowering smartphone prices may result in 2G consumers directly jumping to the next generation band.
According to them, 4G conversions will occur at a faster rate than 3G ones by FY 2019. They feel 3G subscribers will be restricted to places where LTE band coverage is limited. However, the researchers expect 3G to still do strong business for a few years as its reach is likely to be better than 4G.
The BofA ML analysts painted a dire picture for Reliance Jio if the rumors about a delay in its commercial rollout turn out to be true. They think the high-usage Vodafone, Idea and Airtel consumers will shift to 4G by March 2016 as the 3 companies would have launched the band in key urban areas by then.
The men noted that the top 5% of customers, most of whom are post-paid subscribers, contributed to over 15% of the 3 telecom operator’s revenues. These people are not likely to be poached by Reliance as they are probably comfortable within their arrangement. To get these premium users, the company would have to offer a very compelling proposition.
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While the researchers acknowledged 4G tariffs are probably going to come down when Jio introduces its services, they don’t think the strategy is sustainable enough to steal customers away. As per PTI, the BofA ML report goes on to estimate the provider will turn out to be the winner in the long run though.
The document positions Reliance Jio as the market leader in terms of 4G user base from 2017 till 2025. It will be followed by Airtel, Vodafone and Idea. For smooth connectivity, the brand will have to release a 5-band phone which is compatible with the 800MHz, 900MHz, 1800MHz, 2100MHz and 2300MHz bands.