Jio readies itself for fixed broadband assault

Reliance Jio is set to pile more misery on Bharti Airtel with the launch of a low-cost fixed broadband offering.

It’s no secret Reliance Jio is eyeing up the fixed broadband market, though Bharti Airtel executives thought they might have had a bit more time. According to the Economic Times, Reliance Jio has bought controlling stakes in Den Networks and Hathway Cable, giving it a ‘headstart’ on the potentially lucrative segment.

The worry regarding the fixed broadband market is the opportunity. This might sound like a daft thing to say, but the opportunity has been staring incumbents in the face for years. None have actually done anything about it. Like the mobile market prior to the chaos caused by Reliance Jio, it is slumbering due to inaction, but that might all be about to change. If Reliance Jio can carry the momentum from the mobile and value services segments into the broadband space as well, the misery could continue for market incumbents.

According to the lastest figures from the Telecom Regulatory Authority of India (TRAI),while mobile subscription is surging (and with still a lot of room for growth), the fixed broadband market is stagnent in most regions and actually shrinking in others. There are currently 22.2 million broadband subscriptions in the country, compared to roughly 250 million households. Just to put things in perspective, broadband would have to grow 50-fold to even come close to the same scale as mobile.

With the acquisitions of Den Networks and Hathway Cable, Reliance Jio has a starting point. It can begin to rollout its own branded service and undercutting the market in the same way it did for mobile. Over the coming months, expect to see the insurgent telco aggresively spending to expand this infrastructure. Details are thin on the ground at the moment, though the intentions were outlined in May at Light Reading Big Communications Event by Mathew Oommen, President of Reliance Jio Infocomm. Home and enterprise penetration is incredibly low; there are billions to be made for those who are willing to spend to capitalise on the opportunity.

For the traditional telcos in the market, inaction might prove to be the downfall once again. Reliance Jio has destroyed profits for challengers in mobile and the same gameplan could work for fixed broadband. With such low penetration, the opportunity has always been there, but if you are happy with the status quo you are nothing more than a sitting duck. The likes of Bharti Airtel have no-one but itself to blame for missing out on the potential cash bonanza.

One of the most tired phrases in the technology world is disrupt or be disrupted. It’s a cliche which people dread hearing, but it is incredibly true here.

Reliance set to drop $70 million on Radisys to help with the move to 5G

Giant Indian telecoms conglomerate Reliance has agreed to but US open telecoms solutions provider Radisys for around $70 million.

Radisys describes itself as a leader in providing open telecoms solutions. In practice this points towards strengths in NFV, CORD and telecoms cloud in general. Reliance, which launched its massively disruptive MNO Jio less than two years ago, seems to have decided it needs to invest heavily in the next generation of tech if it is to consolidate its position.

“Reliance and Jio have been disrupting legacy business models and establishing new global benchmarks,” said Akash Ambani, Director of Reliance Jio. “Radisys’ top-class management and engineering team offer Reliance rapid innovation and solution development expertise globally, which complements our work towards software-centric disaggregated networks and platforms, enhancing the value to customers across consumer and enterprise segments.

“This acquisition further accelerates Jio’s global innovation and technology leadership in the areas of 5G, IOT and open source architecture adoption.”

“The backing and support of India-based global conglomerate Reliance, will accelerate our strategy and the scale required by our customers to further deploy our full suite of products and services,” said Brian Bronson, CEO of Radisys. “The Radisys team will continue to work independently on driving its future growth, innovation and expansion. The addition of Reliance’s visionary leadership and strong market position will enhance Radisys’ ability to develop and integrate large-scale, disruptive, open-centric end-to-end solutions.”

The agreement is for Reliance to pay $1.72 per share for Radisys, which equates to around $70 million in total and is around 2.5x the $0.70 what the shares cost at the end of last week. Investors don’t seem to be totally convinced the deal will go through, however, because Radisys shares were trading at $1.60 at time of writing. Maybe they’re concerned the Trump administration’s economic nationalism will have a part to play.

Reliance Communications pulls the plug on Aircel merger

A merger designed to take on the competitive threat of Jio seems to have been undone by the competitive threat of Jio.

Indian operator Reliance Communications (not to be confused with Reliance Jio, although the two are owned by competing members of the Ambani family) announced over a year ago that it was going to merge with fellow operator Aircell. The move was presumed to have been catalysed by the disruptive entry into the Indian market of Jio.

12 months down the line and Reliance has decided not to follow through, complaining that “Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction.” The inference seems to be that the regulatory deck has been stacked against them, but those shady vested interests are not detailed.

In a full page of bullet-points preceding the announcement, Reliance laments “Unlimited free voice offers and irrational pricing by all industry participants have destroyed the profitability of the traditional 2G/3G mobile business.” This seems to be a direct dig at Jio, but the bullets go on to detail a new 4G-focused strategy reliant (excuse the pun) on network and spectrum sharing agreements with none other than Jio itself.

Other than the no-brainer move of focusing on 4G Reliance plans to focus on non-mobile B2B services, including overseas opportunities. To pay down some of its extensive debt there’s going to be an asset fire-sale, including towers, fibre and real estate. All these courses of action were also on the table a year ago so it seems fair to assume this is very much plan B for Reliance.