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    RJio to offer data at Rs 50/GB; a case for rerating in RIL?

    Synopsis

    Citi group forecast Reliance’s telecom venture’s Ebitda to break even by FY19. It sees the venture to clock 20-25 per cent margins by FY20-21.

    ET Online
    NEW DELHI: Reliance Industries Chairman Mukesh Ambani today said his company will offer data services at a price as low as Rs 50 per GB, the lowest in the world.

    "Data is the oxygen of digital life," said Mukesh Ambani at the company's 42 Annual general meeting, adding that data should never be unaffordable for anyone. The RIL Chairman said that 90 per cent of India's population by March 2017. The company will introduce 4G handsets for as low as Rs 2999, Ambani said.

    The venture, Reliance Jio Infocomm, will be the world's biggest startup with an investment of Rs 1,50,000 crore, the company said in March this year. It is believed that the company’s subscriber base has already swelled to 25 million during trials.

    At present, Jio’s Network covers 18,000 Cities and two lakh Villages. A set of apps Jio offers, Ambani said, will free for active subscribers till December 2017.

    All voice calls for the Jio customers will be absolutely free," Ambani said. Roaming charges will also be zero, Ambani added. In addition, JIO will offer data at Rs 50 per GB (base rate) against Rs 250/GB on an average charged by peers. Jio will launch 10 plans.

    Image article boday
    Reliance Jio users can watch more than 300 live TV channels; Jio Music will have 10 million songs in over 10 languages; Jio Cinemawill have library of more than 6000 movies, Ambani said. The company will launch Reliance Jio services from September 5.

    Incumbent players have already tightened their belts and announced various schemes to retain existing subscribers. The largest domestic telecom operator, Bharti Airtel , recently slashed data charges (4G and 3G mobile internet charges) by up to 80 per cent to as low as Rs 51 per gigabyte (GB) under a special scheme. Vodafone, on the other hand, is offering 1GB data (3G/4G) for Rs 297 with validity period of 28 days. The third largest operator, Idea Cellular, is offering 1GB 3G data at Rs 249 for 28 days.

    “We continue to remain cautious on the sector in the light of the twin risks of Jio's impending launch and the upcoming spectrum auction,” Credit Suisse said in a note.

    Citi group forecast Reliance’s telecom venture’s Ebitda to break even by FY19. It sees the venture to clock 20-25 per cent margins by FY2020-21.

    “This would impact RIL’s FY17-18E Ebitda by 5 per cent, but will boost it by 8-12 per cent by FY20-21E,” it said.

    At present, Bharti has the largest spectrum holding of 770MHz, across 900MHz, 1,800MHz, 2,100MHz and 2,300MHz bands. Reliance Jio Infocomm, on the other hand, holds 596MHz spectrum across 800MHz, 1,800MHz and 2,300MHz bands.

    "A $6 billion negative equity value for Jio suggests low expectations that could be beaten," said CLSA in a recent the note.

    The Jio ecosystem stands tall on FIVE fundamental pillars, said Mukesh Ambani. These pillars, according to RIL Chairman, are:
    1. The best quality broadband network with highest capacity
    2. A world of affordable, 4G smartphones and wireless IP devices
    3. Compelling applications and content
    4. Superior digital service experiences, and
    5. Affordable and simple tariffs




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    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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