Reliance Comm gets govt nod for GSM services

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Reliance, India's No. 2 mobile services firm, provides mobile services on the CDMA platform in 21 of India's 23 telecoms zones and also GSM services in eight zones.

The company said it had paid the fee of Rs.1651 crore ($416 million) and would start GSM services in circles where it is not currently present, after allocation of spectrum or air waves by the government.

It added 1.5 million subscribers in September, lifting total customers to 36.3 million and giving it a 17 percent market share. Bharti Airtel Ltd dominates with 23 percent of the market.

India is the world's fastest-growing mobile services market, adding about 8 million subscribers a month. It has 12 telecoms operators, and around 30 firms had put in 300 applications for new licenses by an Oct. 1 deadline.

In a recent note, Macquarie Research said spectrum allocation for the new GSM services was likely take place by March 2008, and Reliance might launch its new GSM services by the final quarter of the fiscal year ending March 2009.

"We forecast RCOM to continue to be the number two wireless operator in spite of the delay in launching GSM services," said Macquarie, which has an "outperform" rating on the stock.

It would be a crowded field for Reliance Communications, which was likely to be the eighth or ninth GSM operator in some of the new circles, Lehman Brothers has estimated.

That meant by the time Reliance Communications launched its services, those zones would already have more than 35 percent of potential customers signed up.

So gaining market share would be challenging, said Lehman, which also has an "overweight" rating on Reliance Comm stock.

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