Jio likely to achieve Ebitda break even in 2018: Fitch

NEW DELHI: Reliance Jio Infocomm may achieve breakeven on the basis of earnings before interest, taxes, depreciation, and amortisation (Ebitda) as early as in 2018, supported by affordable 4G data offerings and robust infrastructure, ratings agency Fitch has said.

The telecom unit of Reliance Industries ( RIL) is expected to continue to attract consumers in millions and boost data consumption on the back of a wide range of offerings including exclusive media and entertainment content, although it will face intense competition from financially strong incumbents such as Bharti Airtel and Vodafone.

“We expect RIL to be able to take advantage of the strong growth potential in the Indian telecoms market. We expect the robust infrastructure along with its affordable 4G data offerings to support Jio's growth,” Fitch Ratings said in a note on Thursday.

Commercially launched in early September, Jio has already clocked more than 25 million users, attracted by its free voice and data offer till December 31 for users who subscribe to the network by December 3.

Jio has promised free voice calls across the country for life, so it will depend completely on data consumption for cash generation. This strategy is based on the global trend of telcos witnessing a sharp fall in their earnings from traditional voice services and increasingly depending on data to boost revenues.

“We believe falling data tariffs will support significant expansion of overall data consumption in India over the medium term,” Fitch said. Jio’s huge network and an array of data offerings are expected to give it an edge in attracting consumers.