MUMBAI: India's dominant CDMA mobile operator, Reliance Communications, will also offer GSM-based mobile services across the country from Wednesday, in a move to lure more users in a fiercely competitive market.
Reliance, India's No. 2 mobile firm, currently has a modest GSM presence in eight of the country's 22 service areas, but most of its 60 million or so wireless users are on the CDMA platform.
Chairman Anil Ambani said on Tuesday the company had spent 100 billion rupees ($2.1 billion) to expand its GSM services to cover all of India six months ahead of its original plan, and would widen its span in a few months to 24,000 towns from 11,000.
"GSM will be a catalyst in enhancing growth," Ambani told a news conference in India's financial capital. "Now we can offer to our customers the option of GSM or CDMA connection, and a value proposition matching anyone else in the industry."
Reliance Communications shares closed 7.2 percent up at 228.10 rupees in a Mumbai market that gained 1.92 percent.
The shares have been hit hard this year, losing 69.4 percent on failed tie-up talks and lower-than-expected earnings, while shares in larger rival Bharti Airtel are down 27.4 percent. The broader market is down 52 percent this year.
GSM GAINS
Worldwide, GSM technology is more popular than rival CDMA, while in India about three quarters of the total 336 million wireless subscribers are on GSM, according to the latest data.
Indian mobile market leader Bharti Airtel and third-ranked Vodafone Essar, a unit of Vodafone, which provide services mostly on GSM, are adding users at a faster rate than Reliance Communications.
"Within a few months, it (GSM) may translate into better monthly net adds for Reliance. It will help them improve their market share," said Harit Shah, a telecoms analyst at Angel Broking in Mumbai.
Also, starting from June next year, India is planning to allow mobile users to keep their number even if they switch operator, which would increase pressure on telecoms firms to retain users by slashing tariffs.
"Reliance Communications has been looking at number portability to get some churn," Shah said.
Ambani said his company would participate in the third-generation (3G) spectrum auction due in early 2009 and was looking at serving customers in all the service areas.
He said his firm's capital expenditure on 3G services would be between 20 and 40 billion rupees.
Reliance Communications has snapped up a series of smaller overseas assets though tie-up talks with South Africa's MTN aiming at creating a global telecoms firm failed earlier this year.
Ambani said the company would now focus on organic growth.
"Inorganically, there are very selective opportunities... Nothing of scale and magnitude is on the horizon," he said.