Reliance Industries Ltd [RIL] inherited by Mukesh Ambani is in a dilemma to choose WiMax or LTE for providing wireless broadband services. RIL invested close to USD 1 Bn for PAN India BWA license and since then is quiet on its plans. BWA licences are technology-neutral and both WiMax and LTE can be on the same spectrum however these licences allow only data services.

No Tower / Optical Fiber Network deals have been negotiated nor they are in the pipeline. Besides, the handsets/terminal equipment is a significant issue. LTE handsets irrespective of urban or rural rollout will require subsidies while dongles are already available across CDMA 1X and now also 3G mobile networks and tariffs are already competitive. Availability and price of LTE devices will be critical in determining the rollout of services as well as the adoption and therefore the BWA opportunity.

Considering that Reliance’s BWA rollouts will not be an overlay to the 2G and 2.5G networks, the infrastructure requirements will be significant. As per industry BWA will require more towers (500 subscribers versus >1,000 for GSM per site) and while Reliance can share towers with any of the six tower companies in India no deal has been announced yet. Besides, BWA also requires robust/broad pipe backhaul. We believe it is way too early for LTE in India and for 4G data revenue opportunity to be comparable with 2-2.5G and even the upcoming 3G mobile and data opportunity.

Reliance had outlined the India broadband opportunity at 100 million subscribers and US$6-7bn revenue by 2014 and targeted cash breakeven in three years of service rollout which is likely to remain as an empty promise which will be encashed by incumbent operators who have secured 3G licenses and will deploy wireless broadband internet and mobile data services on the same network.

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