RCom's GSM Rollout

Anil Ambani’s Reliance Communications (RCom), the second largest mobile service provider in India, is set to roll out its GSM (global systems for mobile communications) service in new circles by the end of the year. The company has GSM operations only in eight out of 23 telecom circles in the country.RCom expects to finish pan-India rollout of the GSM service by mid-2009, chairman Anil Ambani said in an analysts’ call after the company’s June quarter results were announced on Thursday.RCom is a CDMA (code division multiple access) major and sees good opportunities in the GSM business.The company said that the GSM service would help the company expand market share and increase its average revenue per user (ARPU) as GSM ARPUs are usually higher than those of CDMA players.The company currently has 43 million CDMA subscribers and 8 million GSM users. It was given start-up spectrum to become a pan-India GSM operator earlier this year. The GSM market is dominated by players such as Bharti, Vodafone, Bharat Sanchar Nigam Ltd (BSNL), Idea, and Aircel while RCom and Tata Teleservices rule the CDMA market. Tata Teleservices is also entering the GSM space, which dominates in subscriber numbers both in India and globally. At the end of June, there were 286.86 million mobile phone subscribers in India, out of which 212 million were GSM users. The total number of phone connections in India at the end of June was 325.78 million.
RCom, which recently ended its merger talks with South African major MTN, would continue to explore acquisitions abroad, Ambani said. The two companies called off their exclusivity talks citing ‘certain legal and regulatory issues’. The proposed merger would have created a $60 billion telecom entity.
On RCom’s tower business, Ambani said that Reliance Infratel was in infrastructure-sharing talks with a number of telcos.
Meanwhile, the company’s net profit rose 24% year-on-year to Rs 1,510 crore in the quarter ended June 30, posting the slowest growth in nine quarters after adding less profitable customers in rural areas. Its sales grew 24% to Rs 5,320 crore. RCom doubled the number of villages covered by its network to 6,00,000 in the nine months ended March 31, a statement on its website said.
Anil Ambani is spending $6.5 billion (Rs27,625 crore) to build a nationwide GSM network to narrow Bharti’s lead. New wireless providers, who are likely to start operations in nine months to a year, may undercut prices to gain market share leading to a “tremendous squeeze on margins” for existing operators, KPMG’s Shetty said.AT&T Inc., the biggest US phone company, in March had said it will be “aggressive” in its plans to enter India’s mobile phone industry to add customers in the world’s second biggest market for wireless services.
Russian billionaire Vladimir Yevtushenkov’s AFK Sistema in January said its Shyam Telelink Ltd unit will pay $630 million for phone licences in 21 areas. Sistema plans to spend as much as $7 billion with partners to expand its wireless network in India.