Post GSM shutdown, RCom may build own 4G network separate from Jio’s

Reliance Communications today said that it was ‘optimizing’ its 2G and 3G networks in the light of its decision to focus on 4G, but also dropped a hint it may use the towers and infrastructure to later launch its own, fully-owned 4G network.

At present, it depends on Reliance Jio for delivering 4G services and moving to own network could help the company become more competitive in pricing.

Responding to a question by the stock exchanges on whether it was shutting its GSM services down, it said:

“RCOM will be optimizing its 2G and 3G footprint, and related infrastructure and human resources, with effect from 30 November 2017,” it said.

The statement hinted that it may use its network infrastructure to later launch its own 4G network distinct from its joint network with Jio.

In the past, the company has always maintained that its intention was to ride on Jio’s 4G network to deliver its own LTE services.

However, in today’s statement it added the words ‘as at present’.

“The Company’s 4G-led strategy will be executed, as at present, on the back of capital-light access to India’s most extensive 4G mobile network, through already operational spectrum-sharing and ICR (intra-circle roaming) arrangements with Reliance Jio.”

As things stand, the company has not been able to gain much traction for its 4G plans relative to other players due to higher prices.

It is likely that its reliance on Reliance Jio as an upstream supplier of 4G services could be constraining its pricing freedom.

Players like Idea Cellular, Bharti Airtel and Vodafone had also relied on intra-circle roaming agreements to launch 3G service when such spectrum was hard to come by.

The ICR agreements were part of the reason why 3G prices remained unaffordably high and the technology more or less failed to take off in India, resulting in poor returns for these companies on the money invested into 3G.

These agreements were dissolved when these companies got hold of their own 3G spectrum later.

Once RCom shut down its 2G and 3G services, it too will have surplus spectrum to launch its own 4G network using its existing towers and fiber network. The company will have spectrum in band 1, band 3 and band 5.

It has also recently got substantial amounts of precious 850-MHz spectrum from its deal to acquire MTS’ operations in India. If it now breaks up its spectrum sharing agreement with Jio, it would have enough spectrum in most circles to operate its own 4G service in this band. This could potentially cause some problems for Jio.

However, to set up its own network, the company would need to invest a couple of thousand crores of rupees at the least.

Alternatively, it could add the spectrum to Jio’s network by expanding its spectrum sharing agreement with the Mukesh Ambani-led firm.