In a post-results analysis, Morgan Stanley said it expects Jio to have more than 30 million subscribers by the end of this financial year doubling to 60 million by the next, with an average revenue per user that will be 1.3 times to 1.8 times higher than the industry level.

MUMBAI – Expecting Reliance Jio to launch its 4G services over the next 3-9 months after an investment to date of over $19 billion, Morgan Stanley expects the retail-to-refining major to log revenues of $1 billion from the telecom business this financial year.

In a post-results analysis, the top investment banker said it also expected Jio to have more than 30 million subscribers by the end of this financial year doubling to 60 million by the next, with an average revenue per user that will be 1.3 times to 1.8 times higher than the industry level.

It said the current voice and data realisation per user was 200.

"Capex (capital expenditure) spend is to be front-ended, expected at over $4.5 billion in 2016-17 — thus (it) would take the total investments into the venture to over $23 billion into the launch, among highest in the industry," it said.

"We were estimating launch in early 2nd half of 2016. However, if the launch gets delayed to late 2nd half of 2016, it would mean incumbents could have a better operating environment in the short term," it said its analysis after Reliance Industries' 4th quarter results announced on April 22.

"Management suggested the current test program is to be upgraded into commercial operation in the coming months, which means Reliance Jio would already have a couple of million subscribers into the launch."

The Morgan Stanley report also gave its take on the handsets launched by Jio.

It said four models of 4G enabled handsets had been launched with price range of between 6,000 and 19,000 anf that a rapidly-evolving handset ecosystem would aid fast proliferation of the 4G services.

"Already, more than 50 percent of smartphones shipped are LTE-enable (long-term evolution, for high-speed data services). Currently more than 45 million 4G handsets are estimated to be in the market out of 250 million smartphones," it said.

Out of that around 150 million 4G models are are available in the market with 60 of them below a price tag of 12,000. The report said the average selling price of such smartphones has also fallen from mor than 25,000 a year ago to around 10,000.

What is awaited, according to the Morgan Stanley report, is for the company — which on its own has 850 MHz spectrum in 10 out of 22 circles — to integrate itself with the 800 MHz spectrum of Reliance Communications, as per their pact for trading in nine circles and sharing in 17 circles.

What's the flip side if the launch takes longer? "If Jio launch is delayed to late 2016, we think Bharti Airtel is best positioned to gain. It is spending annually over $2.5 billion in domestic wireless capital expenditure and by far has the highest 4G coverage among the incumbents."

The report said key risk in the industry over medium-to-longer term is data cannibalizing voice, which would impact incumbents, as voice still accounts for more than 80 percent of the revenues. "Also, a well-funded new entrant launching services would increase the competitive intensity."

What makes Morgan Stanley bullish on telecom: An exploding data market, like voice in 2003.