The Indian telco’s move to take over the telecom spectrum auction and the launch of its new smartphone, Jio, have triggered fierce debate among industry analysts.
Ranjio is the first telecom operator to enter the spectrum auction in the history of the country, with the country’s telecom regulator, TRAI, set to formally announce the results on Wednesday.
“The first-ever auction of telecom spectrum was held on the promise of the government to protect the interests of consumers and provide the best possible services for them.
In the event of a repeat of the past, the regulator has made it clear that spectrum should be auctioned only for the good of consumers.
The fact that the auction is being conducted in an open manner, which has resulted in a massive amount of spectrum being auctioned and auctioned for the private sector, is a positive step,” said Prashant Bhanu Mehta, executive director at IDFC, an independent telecom consulting firm.
But, many analysts feel that Jio’s move could not come at a worse time for the telecom industry.
It is likely to result in a major spike in prices and a further devaluation of the rupee, said Mehtal.
Analysts said that J.P. Morgan, which helped Jio secure a spectrum auction last year, is now taking a hands-off approach with the telecom regulator.
“It is a big loss for the industry to see Jio taking over the auction and it’s very disappointing that the regulator seems to be giving the go-ahead to Jio in the first place,” said Rakesh Kumar, head of technology at research firm IBCTC.
“If Jio takes over the spectrum, we may see a lot of price hikes and that will be a setback for the country,” he added.
This will be Jio first step into the telecom sector.
However, the telecom giant has said that it will keep working with the government and the government will work with the telcos on the rest of the spectrum allocation.
India’s telcos have been struggling to attract investment since the launch last year of its $US3.6 billion ($4.7 billion) Reliance Jio.
They were facing a huge shortfall in revenue and had been negotiating with foreign operators to buy the telecom assets.
The government has made a number of changes to the spectrum process in recent months, including raising the threshold for the government-owned telecom companies to enter spectrum auctions to 10% of the gross revenue generated by the telco.
However the government has also said that a 10% minimum threshold will be implemented by January 1, 2020.
In the wake of the announcement, J. P. Morgan said in a statement that it has not been approached by any government agency for its services, which include the creation of mobile apps, and its services on Jio will be carried out by the company and its employees.
Jio is a $US30 billion ($45 billion) telecom company that has set up offices in India.
The company has launched two new smartphone models, the Jio S, priced at just under $US1,000 ($1,350), and the JIO 3, priced around $1,500 ($1 and 3, respectively).
According to the latest estimates, the company has raised about $US2 billion ($2.5 billion) of the $US10 billion ($12 billion) it expects to raise by selling the telecom licences, and it is planning to invest another $US5 billion ($6 billion) to launch a new product line.
At the same time, the government’s decision to allow Jio to take a majority stake in the spectrum is likely having a big impact on the telecom companies.
According to a report in The Economic Times, the deal will give the telcom giant an advantage over the others, as it will be able to leverage its huge stake in spectrum, which is about 10% in the telecom operator.
Jio has already invested about $2 billion (Rs 2.7 crore) into the project.