Jio set to pump Rs60,000 cr this year; focus on broadband
08 May 2018
Mukesh Ambani-led Reliance Industries Ltd (RIL) is likely to invest another Rs60,000 crore this year in its telecom business Reliance Jio Infocomm with an emphasis on faster rollout of broadband services and wireless expansion, Livemint reported quoting unnamed company sources.
According to the report, betting big on its optic fibre business, Jio may also borrow as much as Rs1 lakh crore.
In 2016, Mukesh Ambani had said that investment in the telecom startup Jio would be around Rs2,50,000 crore.
A Jio official said that the news is "speculative" in response to queries about the investment plans.
JP Morgan noted in its recent report on RIL, “Management made it very clear that their focus in the near term is to retain and grow their subscriber base and they would respond to market pricing. Essentially the implication was that incumbents would need to raise tariffs, but this would effectively lead to loss of market share for incumbents as Jio would offer the best 'value' to subscribers and hence continue to see large subscriber additions.”
The report further stated that JIO is expected to launch its broadband business with a pricing strategy similar to that of its telecom arm, given its focus is on creating a new market.
While Jio’s average revenue per user (ARPU) fell to Rs137 from Rs154 in the last quarter of 2017-18, it still remains better than that of Airtel and Idea Cellular. Jio also managed to add almost 9 million subscribers during the quarter.
“Jio is expected to remain aggressive to gain market share, which could keep industry revenue under pressure and return ratios of incumbents suppressed,” noted India Equity Research in a report on Monday.
JioFiber, the wired broadband arm, has started offering what it claims to be 'ultra-high-speed' fibre to home (FTTH) broadband connections with 1.1 terabytes (TB) of free data at speeds of 100 megabits per second (mbps) in select markets in the country. Commercial services are likely to be rolled out in the second-half of the year.
The company currently claims more than 300,000 km of optical fibre network in the country and is expected to target over 100 million households across the country with the service.
Unlike a regular broadband connection where the fibre cable reaches only till the building, while the last few meters till the customer's doorstep use traditional cable, which reduces the speed, JioFiber connectivity comes directly to the home.
Currently, Jio charges a security deposit of Rs4,500 for the ONT device (GigaHub Home Gateway), refundable if users discontinue using the JioFiber services. Reliance Jio is offering its JioFibre service in cities including Delhi-NCR, Mumbai, Ahmedabad, Surat, Vadodara and Chennai.