Jio soft launch expected by April end; Nationwide by Dec end

Reliance Industries is likely to soft launch its much-talked about high-speed 4G telecom services Jio by April-end, UBS said in a research note.

"Contrary to market belief that Jio has started rolling out 4G SIMs commercially, our channel checks in Mumbai and Delhi suggest that although SIMs have been shipped to the retail outlets, they are not yet available for sale," it said.

At present, Jio SIM cards are only available to Reliance employees post its beta launch in December 2015.

"Our speed test on trial SIM cards in Reliance outlets indicate network speed of 18-20 Mbps versus Vodafone's 4G speed of 8-10 Mbps (higher speeds may be due to Jio's empty network)," the note said.

UBS said it expects Jio to initially rollout bundled 4G offering on a limited basis along with its LYF branded devices and expect it to rollout nationwide services with SIM sale on standalone basis only in the second half of 2016.

"All the market leaders have already launched their 4G services and have extensively been promoting their 4G offerings," it said adding Airtel was the first to launch 4G giving it a significant first mover advantage.

While Airtel offers 4G services in 15 circles, Idea has started 4G services in 575 towns across its 10 circles and intends to extend it to 750 towns by the first half of 2016.

Having started its 4G services in five circles in February, Vodafone is promoting itself as 'World largest 4G network'. "We believe the delay in RJio launch has helped the market leaders to strengthen their 4G offerings," UBS said.

"We believe the market may be overly concerned over Reliance Jio's disruptive impact and ignoring rapid data growth in Indian mobile market which has led to significant operating leverage," it said.

Over the past 12 quarters Airtel and Idea data revenues are up 4-5 times and EBITDA margins up 800 basis points and 7000 bp respectively.

"We believe that Indian data market is likely to grow 9 times (to $38 billion) by 2026 and Airtel and Idea are well positioned to benefit from this trend given accelerated 3G+4G rollout and Strong spectrum footprint," UBS said.

Post Videocon deal, Airtel has 4G coverage in 19 circles (88 per cent of revenue base); Idea has 3G+4G spectrum in its 8 leadership circles. "We are also positive on Bharti Infratel as it offers a low beta play on data growth," the note added.