Reliance Communications has earmarked Rs 2,000 cr for Mumbai and Delhi circles, and Rs 6,000 cr for the rest of the country.
MUMBAI: The blur over the GSM business of Anil Ambani-controlled Reliance Communications is getting clearer.
The company, sources said, plans to have GSM operations in 23 circles soon. It currently has GSM operations in 8 circles, mainly in eastern India.
RCOM has earmarked Rs 2,000 crore for Mumbai and Delhi circles, and Rs 6,000 crore for the rest of the country.
It is learnt to have worked out an operational model for its GSM foray. Key officials would soon be called to give the final nod, following which the training process would start, sometime in December.
Sources said the marketing campaign for expansion of its GSM footprint will begin early next year.
Reliance Communications has set a target of 8 crore new GSM connections across the 23 circles by the end of 2007.
India’s mobile subscriber base is around 13 crore with over 66 lakh subscribers added just in October. Of this pie, GSM accounted for 9.6 crore and CDMA 3.3 crore.
A company spokesperson said Reliance Communications had already applied to the government for allocation of spectrum for 23 circles. “We did that in February for seven circles and in June for another eight circles. We are already providing GSM services in the remaining 8 circles,” he said.
The spokesperson said the company remains keen on a pan-India GSM footprint.
India’s mobile user base is expected to triple to 385 million by March 2010 and mobile service revenues as a percentage of GDP will rise from 0.95% in FY06 to around 2.19% by FY10.
Analysts said Reliance Communication knows that GSM margins are better compared with CDMA and getting the required spectrum is a hurdle to growth in CDMA space.
But the expansion of GSM service would entirely depend on the availability and allocation of spectrum by the Department of Telecommunications (DoT). In June this year, the company moved DoT for allocation of 4.4 MHz.
According to a research report, Reliance Communications is well-poised to benefit from the growing mobile penetration in the country. The rules of the mobile services game have changed significantly since December 2005 by the introduction of lifetime validity plans, which make up around 15% of the gross additions in the industry. Most operators are aggressively expanding coverage, which is helping mobile adoption.
Reliance Communications covers 3,881 census towns and 245,728 villages in India as of June 2006, translating to population coverage of 54%. The company intends to expand coverage aggressively and cover around 75% of the population by March 2008.
Bharti Airtel covers 4,357 census towns and 155,076 non-census towns and villages as of September 2006, covering 50% of the population. The company is likely to expand coverage to all the 5,200 census towns by March 2007. Additionally, it intends to cover around 70% of the population by March 2008.
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