RJio expected to launch services by mid-July: Credit Suisse

New Delhi: Reliance Jio Infocomm (RJio) is expected to launch services by mid-July and it will have quite a significant impact on the telecom industry, says a report. The Mukesh Ambani led-firm may also start selling 4G enabled handsets even before the launch as it hopes to build the device ecosystem by itself, Credit Suisse said in a report. "With 70,000+ sites live (2,300 MHz on all, 1,800 Mhz wherever Jio has the spectrum), we believe the launch is nearing for RJio.

We expect a soft launch by mid-July 2015, which would be earlier than the current market expectation," the brokerage firm said. Credit Suisse said it believes the impact on the rest of the industry from RJio's launch can be quite significant and should belie the recent optimism in the telcom stock prices. The brokerage firm said its recent channel checks suggest that RJio's launch preparations are entering the final stages and the company is close to finalising wholesale distributors in most circles (the final step of finalising retailers can happen just a couple of weeks before launch).

"Our latest update is that RJio has shortlisted distributors in most circles. The high likelihood of RJio coming out with higher commission rates than market levels is getting some of the existing distributors we spoke to excited," it said. Separately, the firm is building a device distribution network as it hopes to drive the 4G device ecosystem by itself involving low-cost 'Jio' branded handsets. Operators in India do not sell handsets and there are separate distribution channels managed by handset OEMs and specialist logistics companies that do the same.

However, RJio is taking a different strategy and working on a dedicated handset distribution infrastructure, given that having sufficient 4G handsets supply is critical for their business. "We understand the process of setting up device distribution is much more advanced than that of service distribution. In fact, it is likely that RJio starts selling devices before the 4G service launch so as to seed the market with devices prior to launch," it added.

Credit Suisse said from its discussions, it assumes RJio's internal target could be to sell two-thirds of all 4G smartphones sold in India through Jio's own distribution network. "We believe if RJio comes to market with devices priced below USD 80-90, it could be quite disruptive for the market," it said. The report said with 18 data centres around the country, it suspects RJio probably already has the largest data centre footprint in the country.