They say expect the unexpected, and this is exactly whats shaping up in the Indian telecom sector. Two rivals, Reliance Jio Infocomm (RJIL) and Bharti Airtel are contemplating joining forces in the highly lucrative 4G sector.
They say expect the unexpected, and this is exactly whats shaping up in the Indian telecom sector. Two rivals, Reliance Jio Infocomm (RJIL) and Bharti Airtel are contemplating joining forces in the highly lucrative 4G sector. This is primarily due to the efforts of the men steering the two giants Mukesh Ambani, whose RIL owns RJIL and Sunil Mittal, the man behind Airtel Indias largest cellular company. Talking at the Progressive Punjab Summit in Mohali recently, Ambani commented, "For further enhancing the digital experience, we can have a collaborative partnership with our friend Mr. Mittal."
While collaboration between the two majors isnt something new (they have already joined hands to share capacity of a submarine cable), the scale at which this collaboration could take place is quite immense. Many experts in this field point out to a single area that could be key for a fast rollout of services across India - device and telecom equipment procurement. The whole 4G ecosystem is in its nascent stage of growth and development and a concentrated effort by RJIL and Airtel would have a huge payoff in the long run. Also, its benefits towards the consumer in offering a value-for-money proposition are immense.
Bharti Airtel is the only operator in India offering 4G services presently. The telecom giant has launched 4G services in Kolkata, Bangalore, Pune and Chandigarh. However, the services are yet to fully reach stratospheric levels on account of high prices. A big reason to go ahead with this deal for both the companies would be reducing the cost of the services as well as devices according to analysts. This is evident as one of the few things hampering Airtels 4G services is high price of the services. Mahesh Uppal, Telecom Consultant and Director at Com First commented, "They can consolidate the device and network equipment procurement to get economies of scale. Besides, applications and services is another area of collaboration between the two companies." Other experts in the domain seem to generally agree with this sentiment and echo the fact that a partnership between Indias biggest telecom operator and a new entry backed by a huge cash pool would benefit the consumer. Also, it would lead to lower infrastructure costs and with skill-set sharing pave the way for a partnership to cover other aspects as well as other telecom service areas
Thats not all. While Airtel owns BWA spectrum in eight circles (including Punjab, Haryana, Delhi, Mumbai, Kerala and Karnataka), Reliance Jio is the only telecom company with pan-India spectrum. So, some kind of collaboration can be worked out in PSTN and 4G connectivity. While Bharti needs 4G in all the circles, Reliance would need to offer PSTN connectivity. "There is definitely scope for collaboration in PSTN and 4G spectrum," says Uppal. Overall, for the general public and growing mobile consumer in the country, the deal would be a huge positive and give a huge boost to the 4G ecosystem. Mobile broadband pricing wont see any leeway in the near future. As a result, telecom companies need to find out new and innovative ways to ensure that the increased costs are not passed down to the consumer. Hence, such a partnership would make business sense for both the parties. Moreover, this could also set a precedent and lead to other such partnerships in the near future.