Will Mukesh Ambani’s Telecom Gamble Pay-Off?

The Telecom Commission has cleared a proposal allowing operators with broadband wireless access (BWA) spectrum to offer voice services by paying Rs 1,658 crore (Rs 16.58 billion) and migrate to the universal licence regime.

There is no doubt the chief beneficiary of the move would be Mukesh Ambani’s Reliance Jio Infocomm which already has a pan-India BWA licence.

The telecom company had forked out Rs 12,874 crore (Rs 128.74 billion) to acquire the licences in 2010, but its possibilities were limited as it was only permitted to offer data services.

The Telecom Commission’s decision, therefore, offers a great opportunity for the company to go all-out in the market. Its voice services are expected to be launched by June this year.

Reliance’s entry could disrupt the stability that is slowly coming back into the sector.

After years of cutthroat competition and falling tariffs, incumbent operators, after the Supreme Court cancelled the licences of many new players, had recently raised tariffs to improve their realisation per minute. They were understandably pleased with the way things were turning out for them. Many telcos were even talking of another 20 per cent increase in tariff in the next six to twelve months.

Experts say without voice revenues, Mukesh would have had to either join hands with another telco or buy out a telco operating in the 2G and 3G space so that he could offer both data as well as voice services. Now he does not need to do any of this. Bharti Airtel as well as Aircel, which have a large play in the BWA space, would also benefit as the new rule will give them an additional band in 2,300 Mhz for voice.