RIL AGM: No major surprises for telecom sector

29 Aug 2023 , 11:03 AM

During RIL’s Annual General Meeting (AGM), Chairman Mukesh Ambani announced that JIO AirFiber (5G FWA) would be launched on 19th September, with pricing details yet to be revealed. The chairman also stated that 200mn+ homes and premises would be connected over the next three years — double the earlier 100mn target to be connected by fiber and FWA. Currently, JIO has 10mn FTTH connections; the achievement of the 200mn target would hinge on CPE affordability and pack pricing. While there was no announcement on the widely-anticipated affordable 5G handset(s), one cannot rule out a festive-season launch. Analysts of IIFL Capital Services do not see any changes to their numbers and the US$89bn EV estimate for JIO. 

JIO Air Fiber (5G FWA) to be launched on 19th September: High bandwidth of the 26GHz band will enable telcos to offer near-fixed line speeds and experience through 5G. RIL Chairman stated that 5G FWA rollout can achieve up to 150k connections per day — 10x pace of fiber (FTTH) rollout — since the latter requires digging and approvals from municipal bodies and housing societies. 

200mn+-homes target in 3yrs aggressive and may require attractive pricing: JIO has not yet revealed FWA pricing. Bharti recently launched 5G FWA in Delhi and Mumbai, pricing it at par with FTTH (Rs799/month for up to 100Mbps speed, and Rs2,500 security deposit for the CPE). JIO’s target of connecting 200mn+ homes and premises over three years looks ambitious, unless the pricing is disruptive. Moreover, at over US$120, the 5G FWA Customer Premise Equipment (CPE) is still fairly expensive even though large orders from JIO and Bharti can bring this down. 

5G FWA may mostly complement FTTH in the near term: In the near term, analysts of IIFL Capital Services expect most of the action in the 5G FWA market to be in metros/cities where telcos could circumvent expensive RoW charges and/or time-consuming FTTH rollouts, through 5G FWA.

5G rollout has been brisk: The chairman stated that JIO has deployed ~85% of the total 5G cells in India. This is not surprising, since: 1) JIO has ~2x of Bharti’s 5G location count. 2) Each of JIO’s 5G location has 6 cells (2 bands x 3 sectors), while the corresponding number for Bharti varies between 2 and 3 (one band with either 2 or 3 sectors). 

Targeting 1mn 5G cell count by Dec 2023 — translates into ~167k locations: JIO intends to take its 5G cell count to 1mn by December 2023 (pan India coverage), which will translate into ~167k 5G unique locations. This is in line with JIO’s statement in the Q1FY24 results that at 115k locations, it has covered 65% of 5G rollout by scope. 

Focus on Enterprise and SME segments: The chairman mentioned that JIO endeavours to tap into the large, growing enterprise connectivity market as well as adjacencies; and also called out the significant potential of the SMB segment. Analysts of IIFL Capital Services note that JIO’s progress in the Enterprise space has been gradual, so far. 

Others: 1) JIO is deploying its own 5G stack for 26GHz band. 2) It has built its own small cells. 3) 5G has resulted in an increasing trend of highARPU, post-paid customers choosing JIO while the telco’s net port-ins via MNP is ~5x of its closest competitor (though analysts of IIFL Capital Services also note that Bharti’s post-paid adds in Q1FY24 were the highest in recent times and its mobile revenue growth industry-leading). 4) JIO Bharat Phone will play a key role in converting 250mn 2G users into 4G.