Jio triggered a price war in the sector

Anil Ambani, chairman of the Reliance Communications, said Mukesh Ambani-led Reliance Jio’s entry into the telecom sector would help his debt-laden company in the long-term.

RCom reported its second consecutive quarterly loss on May 28 and had its credit ratings downgraded. The entry of Jio, with free data and voice offers, has triggered a price war in the country’s telecommunications sector. Telecom operators are facing pressure on income, profitability and other financial metrics on account of competition intensified by the entry of Reliance Jio.

“I think that if you are judging for six months, you are right but if you are judging for three years and five years, as we create the new Aircom, the new wireless entity, there is a huge long-term strategic value,” he said of Jio’s entry.

“If you see the numbers in capex that Bharti has to invest or Idea-Vodafone combine has to invest in spectrum, in fibre network, in telecom towers, it is going to be mind-boggling,” he said. “But for us, it's very simple as in medium to long-term we have this unique advantages of going for their (Reliance Jio's) one lakh towers, one lakh fibre, ICR arrangements in all circles. If there is an option in the future for the sale of spectrum auction for 5G, we have options to use their future spectrum without incurring any additional capex,” Mr. Ambani said.

Talking about Reliance Jio’s free offers, Mr. Ambani said, “If their free offers went on for five years, then it’s a different thing because nothing can compete with free. Only free can compete with free.”

Mr. Ambani said that his relationship with his brother Mukesh Ambani `is cordial’ and added that all speculations to the contrary were unnecessary even as their telecom ventures would continue to be separate entities.

When asked about future co-operation between Reliance Jio and Reliance Communications, Mr. Ambani said, “Reliance Communications and Reliance Jio are separate entities and that will continue. We will have strategic co-operation in terms of spectrum, fiber, intra-circle roaming, towers and any other areas, which can bring synergies, cost savings and that is a strategic roadmap, which will continue.”