Reliance to Launch Nationwide GSM in India by Year-End; Planning Overseas MVNO

Reliance Communications, currently India's second-largest mobile operator, today said it would launch nationwide GSM-based mobile services by the end of the current fiscal year (ending 31 March 2009) to become the only operator offering mobile services on both GSM and CDMA platforms in India, the Press Trust of India reports. Currently, the majority of Reliance's mobile customers are on the CDMA platform, but the company has recently been given start-up GSM spectrum to offer nationwide GSM services and also CDMA spectrum in the remaining two circles of North East and Assam. Reliance aims to set up nationwide GSM and CDMA network by March 2009, which will cover 23,000 towns and 600,000 villages, serving 97% of the Indian population, said Reliance Communications President, S P Shukla. With a focus on enhancing the momentum of teledensity growth in rural India, Reliance has also launched an affordable mobile offering—Gaon Chalo—for rural areas. The new offer enables a rural customer to use mobile services at a 50% discount over the cost in the urban areas.

Separately, the Economic Times today reported that Reliance is also planning to offer GSM-based MVNO services across 57 countries in a bid to beef up revenues from international operations. Reliance is the first Indian telecom operator looking at entering the MVNO segment outside the country: MVNO operations are currently not allowed in India. The company is reported to be evaluating the plans and have linked up with operators across Europe, the Middle East, Africa, Australia, and New Zealand. These include Etisalat in the Middle East and Vodafone in New Zealand, besides others. The company is said to be planning to expand this portfolio to more countries where MVNO-based services can be offered. To begin with, Reliance will launch a GSM-based Global SIM card, targeted at Indians travelling overseas. This will be available in pre-paid as well as post-paid options and offer value-added services for niche customers in global markets. Users of this SIM will also be able to receive free incoming calls in 57 countries.

Outlook and Implications

• Expansion in Domestic Mobile Market: The nationwide GSM expansion in India will significantly enhance Reliance's competitive position in its domestic mobile market. The operator has also started addressing the needs of rural markets, which will be a key driver of future growth in India, as urban markets become increasingly penetrated. Competition in the Indian mobile market will significantly intensify following the government's recent move to allow CDMA operators to expand in the GSM segment and open up the market to new players. Reliance's expansion will bring serious threat to other established operators, such as Bharti Airtel, Vodafone Essar, and BSNL. With its strong brand name, management experience, and existing customer base and infrastructure resources, Reliance is also well positioned against the threat from new players, who are still waiting for spectrum to be allocated. At the end of March, Reliance's subscriber market share in the Indian wireless market stood at 17.5%, compared with Bharti Airtel's 23.7%, and Vodafone Essar's 16.9%.

• Aggressive Global Approach: The plan to enter MVNO markets overseas reinforces Reliance's ambition to become one of the major global communications companies. Reliance earlier this year consolidated its global telecoms businesses under one brand, "Reliance Globalcom", for all its global initiatives. Through its various subsidiaries, including the undersea cable unit, Flag Telecom, and the U.S.-based Ethernet service provider Yipes, Reliance Globalcom runs 175,000km of optic fibre and 20,000km of Ethernet backbone in the United States. It provides a broad portfolio of data and voice services, spanning across the enterprise, wholesale, managed services and consumer segments. The company now serves over 1000 enterprises, 200 carriers, and 1.4 million retail customers in 50 countries across five continents. Reliance also plans to venture into the overseas WiMAX markets and earlier this week announced its acquisition of eWave World, a U.K.-headquartered company focused on providing WiMAX services in developing markets (see Word-India: 25 April 2008: Reliance Communications Acquires Stake in WiMAX Service Provider eWave, and World: 17 July 2007: India's Reliance Communications Acquires U.S.-Based Ethernet Firm Yipes).

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