Credit Suisse has come out with a report which says that if the numbers in the world’s largest telecom market are anything to go by, Mukesh Ambani-promoted Reliance Jio Infocomm Limited (RJIL) will do better than initially expected. According to the Credit Suisse, its revision of estimates for the company was based on the faster-than-expected growth of the time-division long term Evolution (TD-LTE) in China.

RJIL is expected to launch services by the end of 2015, using a combination of technologies to provide high-speed wireless data services. It’s the only telecom firm with 2,300 MHz spectrum, needed to offer the TD-LT) 4G, or fourth-generation, mobile telephony technology across all 22 circles in India. RJIL also has 800 MHz spectrum in 20 circles and 1,800 MHz band spectrum in 14 circles. The company is reported to be putting together an integrated technology ecosystem, combining all the airwaves, to provide high-speed, wireless data services across the country.

The fast growth in TD-LTE has led to a drop in device prices, which will help an aggressive new entrant RJIL, and prove detrimental to incumbents Bharti Airtel, Idea Cellular and Reliance Communications. A key indicator of the maturity of a technology is the price of end-user devices. The handset ecosystem is extremely strong now, with 418 TD-LTE models available, at an average price of RMB 1,499 ($241), and with the cheapest handset now priced at only RMB 299 ($48),” the report stated. With good network speeds and performance, and with large number of handsets available at attractive price points, Credit Suisse has revised its December 2015 TD-LTE (4G) subscriber forecast for China Mobile by 10.4 per cent, from 240 million to 265 million. At the latest price points, TD-LTE smartphones can address a subscriber base accounting for 70 per cent of industry revenues. RJIL is, therefore, set to be a very strong competitor for other operators in India.

RJIL is expected to follow the China Mobile model closely. As per the findings of the Credit Suisse report TD-LTE has proved to be a ‘game-changing’ technology shift in China, providing incumbent China Mobile with a working data network. This is facilitating improved data monetisation, particularly as compared with its Wi-Fi network. It is also allowing China Mobile to slow the loss of both subscriber and revenue share. Going forward, TD-LTE will be a game-changer in India, for quite different reasons. Particularly because TD-LTE has allowed a new entrant to utilise a large, until now unused, spectrum resource to enter the market. This will have a negative impact on the incumbent operators, in the shape of upward revisions in spectrum costs and capex costs (some of which have already occurred) and downward revisions in revenue forecasts and earnings before interest, taxes, depreciation and amortisation margins (most of which is yet to come). The success of China Mobile’s TD-LTE network over the past 12 months confirms that RJIL can be a meaningful threat to Indian incumbents, and the sheer size of the ecosystem now supporting China Mobile’s 720,000 TD-LTE base transceiver stations (BTS) and 170 million handsets/customers can now be leveraged by RJIL for a full commercial launch in the coming months.

Another key question related to the use of 2,300 MHz-based 4G technology is the strength of the frequency. As a rule of thumb, the higher the frequency, the lower the signal strength, despite the higher data delivery speed. But R-Jio seems to be addressing this concern and at the launch of its services, R-Jio is expected to have about 70,000 BTSs in place, and will have the second highest capacity of any Indian network (at 74 per cent of Bharti Airtel network size).