Reliance Jio set to disrupt wired broadband space too

Reliance Jio, the telecom arm of Reliance Industries, had announced the launch of its broadband service Jio Giga Fibre across 1,100 cities, the registrations for which started in August this year. The target is to reach 50 million homes. Though analysts expect the wireline broadband market to be around $2 billion, which is small compared to the mobile market at around $22 billion, the future of the industry lies in fibre broadband that will multiply the data speeds and capacity manifold.

The wired broadband market is not far away from the disruption expected to be created by Reliance Industries which earlier shook the telecom market since its entry in late 2016. On Wednesday, the company announced an investment of about Rs 5,230 crore to buy majority stakes in Hathway Cable and Datacom and DEN Networks. This will bolster the existing plans of the company in this space.

This will be critical given the fact that since the onset of 4G services by Reliance Jio, the data consumption has increased significantly. On the network of Reliance Jio alone, the data consumption is around 11 GB per user/month. “This could be the head start for company’s ambitious plans in fibre broadband market. Similar to the telecom industry, the game plan will revolve around low tariffs to make inroads in the broadband market which is under-penetrated,” a senior executive from a telecom firm said.

The broadband market is dominated by state-run telecom players BSNL and MTNL, followed by private telecom firm Airtel. Out of the total of 400 million broadband users, just 18 million are on the fixed line, though the mobile user base has been steadily going upwards of over 1 billion. Airtel has also been quite aggressive in broadband space and has launched its V Fibre and FTTH-based broadband services in few cities already with aggressive expansion plans.

Analysts at CLSA say the acquisitions could help Reliance Jio expand into its existing TV subscriber base of over 14 million. “Reliance may have to invest in laying last mile fibre since the bulk of Hathway and Den Network’s broadband is not on fibre. We expect wireline broadband market potential to be limited to $2billion.”

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