India's Jio to Boost Networks With $4.4B Investment

Reliance Jio, India's newest service provider, has this week revealed plans to spend another $4.4 billion on network expansion and upgrades.

"In view of the unprecedented customer response to Jio's services as well as to address the anticipated growth in demand for digital services, additional investments are proposed to be made into the network to enhance its coverage and capacity," says the press release issued by Reliance Industries Ltd. (RIL) , Reliance Jio 's parent company.

The company has already spent $25 billion on launching its service. Yet despite the vast sums it has pumped into its network, Jio has been unable to provide high-speed connectivity to its customers. According to data published by the Telecom Regulatory Authority of India (TRAI) in November last year, Jio's 4G service is among India's slowest in terms of connection speeds, even though fewer customers are using the network than Jio had intended. (See RJio's 'Free' Strategy: Success or Failure?)

Jio claims to have signed up more than 52 million customers since its launch in September. It has lured consumers by offering them free voice services for life, and free data services for the first six months. But it missed its target of reaching 100 million subscribers by the end of last year. It now faces strong competition from longer-established operators including Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India's biggest telco, which have been cutting tariffs to counter Jio's threat.

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The next war between India's telcos, however, is likely to be fought over quality of service. That explains why Jio is ramping up investments. Rivals have already announced ambitious plans to upgrade and modernize their own networks. Airtel, for instance, is spending $9 billion on Project Leap, an initiative aimed at expanding and improving its infrastructure. It is also deploying fiber-based networks to support high-speed broadband services for its customers. Vodafone India and Idea Cellular Ltd. , the country's second- and third-largest operators, are also making investments in quality-of-service improvements. (See VMware Aims for Key Role in India's Virtualization Market.)

For Jio, establishing a reputation for quality of service will be vital. Doing so will allow the young operator to attract customers from its older competitors. And the fresh investments announced this week should help Jio to build and maintain a technology-driven lead over those companies. Without that, Jio will find it hard to sustain its early momentum.

— Gagandeep Kaur, contributing editor, special to Light Reading

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