Reliance Jio's recently announced broadband offering will impact multiple system operators (MSOs) and direct to home (DTH) players, but will benefit content providers, a report said today.
"Jiogigafiber, a fibre-based broadband service for homes and businesses, by Reliance Industries has the potential to disrupt the retail broadband segment and open up new digital avenues for the enterprise broadband segment," India Ratings said in a report.
It said the level of impact on the MSOs and DTH players will depend on their geographical diversity with regard to subscribers, the relative attractiveness of the market, and current tariffs and service offerings.
The impact will be visible only in fiscal year 2019-2020 even though the service rollout is slated to happen from August 15 this year.
Aggressive posturing by Jio for market penetration will be "credit negative" for existing players, it said.
RIL announced Jiogigafibre, the broadband offering, at its shareholder meeting last week but details such as the pricing are not yet revealed. The company plans to initially launch the offering in 1,100 cities.
It can be noted that the deep-pocketed Jio's entry has wrecked the telecom sector, resulting in mergers, bankruptcy filings, market withdrawals and profits plummeting for entrenched players. Jio made voice, which contributed over 70 per cent of revenues, free, and started off by offering services for free and then announced aggressive plans.
The agency said penetration levels are low in India as compared to other countries globally, with only 7 per cent of the 290 million households having fixed broadband and 180 million TV households.
It said Jio's target of 50 million households is only 18 per cent of the households, and "achievable".
At the current monthly broadband tariff of Rs 500-600 per household, the potential market size for 50 million households could be Rs 30,000-36,000 crore, significant portion of which could be tapped by Jio, it said.
The last mile connectivity will be a challenge for the country's largest corporate as it rolls out the fibre-based broadband offering, it said welcoming the phased rollout strategy which Jio is planning.
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