Moghul.1590 23026M added on the most efficient network in the world. Open Signal testers were able to access an LTE signal 96.4% of the time. That's more than comparable testing on any of the U.S. carriers. Jio pledges to reach 99% of the 1.3B Indians by the end of 2018.

The secret sauce is a state of the art all-IP 4G network that delivers data for ~$0.05 per marginal gigabit. The network cost > $20B to build, but once in place has very low marginal costs. The 150,000 base stations are two or three times as many as Verizon or AT&T, many with Massive MIMO.

They control 300,000 kilometers of domestic fiber and a share of 25,000 kilometers of undersea international.

They haven't released many details on NFV & SDN, but they are using the latest. There are no legacy 2G & 3G networks to support. All calls are VoLTE. They are soon to close on the $4B purchase of 43,000 towers, 178,000 more kilometers of fiber and spectrum.

They have a $B music service, aggressive video plans possibly including Netflix, and a complete line of consumer products on the way. They'll need - and expect - much of the long run profit to come from more than data.

The claimed $140M operating profit may be a stretch because of an unusual depreciation method, but the financial results are remarkable. Jio is conclusive proof that a high volume/low price strategy can work.

In 2014, I asked Carlos Slim whether a similar low cost/high volume model could work in Latin America. Xavier Niel proved it out in France, becoming a multi-billionaire. Indonesia & Thailand, as well as India, are headed in the same direction.

Data isn't free, but it's so cheap everyone can have plenty.

  

 Q1 From Jio

POSITIVE NET INCOME IN THE FIRST YEAR OF COMMERCIAL OPERATIONS; NET PROFIT FOR THE YEAR AT ` 723 CRORE

ROBUST FINANCIAL PERFORMANCE IN A COMPETITIVE MARKET ENVIRONMENT

SUSTAINED GROWTH IN SUBSCRIBER BASE TO 186.6 MILLION

STRONG CUSTOMER TRACTION ON DIGITAL OFFERINGS

DATA CONSUMPTION AT RECORD 506 CRORE GB IN THE QUARTER; 17.4% Q-O-Q GROWTH IN DATA CONSUMPTION

WORLD’S FASTEST GROWING & MOST EFFICIENT DIGITAL SERVICES PLATFORM HIGHLIGHTS OF QUARTER’S (Q4 – FY 2017-18) PERFORMANCE

  • Jio has continued its strong subscriber growth trend with net addition during the quarter of 26.5 million (as against 21.5 million in the previous quarter)

  •   Gross adds at 27.9 million and churn of only 1.4 million implying the lowest industry churn rate at 0.25% per month

  •   Jio subscribers continue to demonstrate high activity level with average data consumption per user per month of 9.7 GB and average voice consumption of 716 minutes per user per month

  •   Continued expansion of 4G network coverage and further deepening in existing areas to achieve 99% population coverage during 2018

  • World’s largest mobile data consumption network 

  • Ranked fastest network over last 15 months by TRAI’s MySpeed Analytics app (average download speed of 17.9 Mbps during March 2018, as per TRAI)

 

Standalone Financials (` crores)

4Q’ 17-18

3Q’ 17-18

QoQ Growth

Value of Services

 

8,404

 

8,114

 

3.6%

Operating revenue

 

7,128

 

6,879

 

3.6%

EBITDA

2,694

 

2,628

2.5%

EBITDA margin

 

37.8%

 

38.2%

 

-1.1%

EBIT

1,495

 

1,436

4.1%

Net Profit

 

510

 
 

504

 
 

1.2%

􏰀 Standalone revenue from operations of ` 7,128 crore (3.6% QoQ growth)
􏰀 StandaloneEBITDAof`2,694crore(2.5%QoQgrowth)andEBITDAmarginof37.8% 􏰀 Standalone Net Profit of ` 510 crore
􏰀 Subscriber base as on 31st Mar-18 of 186.6 million
􏰀 Lowest churn in the industry at 0.25% per month
􏰀 ARPU during the quarter of ` 137.1/ subscriber per month
􏰀 Total wireless data traffic during the quarter of 506 crore GB
􏰀 Total voice traffic during the quarter of 37,218 crore minutes

dave askOn Oct 1, Verizon turned on the first $20B 5G mmWave network. It will soon offer a gigabit or close to 30M homes. Thousands of sites are live in Korea; AT&T is going live with mobile, even lacking phones. The hype is unreal. Time for reporting closer to the truth.

The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while reducing capex. Deutsche Telekom and Orange/France Telecom also confirm they won't raise capex.

Massive MIMO in either 4G or "5G" can increase capacity 4X to 7X, including putting 2.3 GHz to 4.2 GHz to use. Carrier Aggregation, 256 QAM, and other tools double and triple that. Verizon sees cost/bit dropping 40% per year.

Cisco & others see traffic growth slowing to 30%/year or less.  I infer overcapacity almost everywhere.  

Believe it or not, 80% of 5G (mid-band) for several years will be slower than good 4G, which is more developed.

-------------------

5G Why Verizon thinks differently and what to do about it is a new report I wrote for STL Partners and their clients.

STL Partners, a British consulting outfit I respect, commissioned me to ask why. That report is now out. If you're a client, download it here. If not, and corporate priced research is interesting to you, ask me to introduce you to one of the principals.

It was fascinating work because the answers aren't obvious. Lowell McAdam's company is spending $20B to cover 30M+ homes in the first stage. The progress in low & mid-band, both "4G" and "5G," has been remarkable. In most territories, millimeter wave will not be necessary to meet expected demand.

McAdam sees a little further. mmWave has 3-4X the capacity of low and mid-band. He sees an enormous marketing advantage: unlimited services, even less congestion, reputation as the best network. Verizon testing found mmWave rate/reach was twice what had been estimated. All prior cost estimates need revision.

My take: even if mmWave doesn't fit in your current budget, telcos should expand trials and training to be ready as things change. The new cost estimates may be low enough to change your mind.