Reliance Jio May Opt For Multiple Vendors If Supply Crunch Continues Due To Coronavirus

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The continuation of the deadly Covid-19 outbreak may drive Reliance Jio Infocomm to consider a multi-vendor strategy as its current 4G networks vendor Samsung could be vulnerable to ensuring uninterrupted supplies with the deadly virus spreading to South Korea, analysts and industry executives said.

Industry experts said Jio’s rivals, Vodafone Idea, and Bharti Airtel, who buy a chunk of their networks from China’s Huawei and ZTE, though may see at least a 25 per cent spurt in procurement costs in the next few quarters if driven to bridge shortfalls from European vendors like Ericsson and Nokia, which could weigh on their capex plans unless they pass on to consumers in the form of higher tariffs, said industry experts.

Unlike Bharti Airtel and Vodafone Idea, who have multiple vendors, Jio buys network gear only from South Korean supplier Samsung. Till recently, analysts had maintained that Jio won’t be impacted at all by the coronavirus epidemic as it does not use Chinese equipment, but the situation has now changed with the virus spreading to South Korea.

Telcos though downplayed worries about any immediate jump in gear procurement costs or capex triggered by likely disruption in supplies from Chinese vendors, saying the AGR payments crisis has sharply reduced telco spends on network expansion, and recent tariff hikes by the Big 3 telcos too has cut consumption levels, reducing network load.