Why Anil Ambani wants to revive the GSM arm, Reliance Telecom ?

PTI & Hindu have reported that Reliance Telecom, GSM arm of Reliance Communication’s has applied for additional spectrum. It is well known fact that Reliance Infocomm , the CDMA arm of Reliance Communication’s is the third largest mobile telecom service provider in India. While its GSM arm, Reliance Telecom has a mere market share of 2%. It is speculated that Reliance Telecom will start services in Delhi & Mumbai circles soon.

Internationally telecom has been a rapidly evolving technology. With the advent of VoIP, their are limitless possiblities on how communications can be established at fraction of the cost. However, for value added services and to maintain excellent Quality of Service, IP networks involve significant investments too. It is learnt that, their are companeis like SIPPhone,Tropos, and others who want to provide mobility on IP networks. However, advanced telcos like NTT DoCoMo have invested heavily to make the transition from 3G towards super 3G and 4G with a ton of value added services. I am unaware of the developments in CDMA.

Now why is Anil interested in reviving the GSM arm ? Reliance has to pay 7% royalty on every CDMA compliant equipment and mobile handset it uses or sells. While CDMA operators in China pay 2% and telcos in the US pay 0% royalty. Additionally, Anil Ambani had always favored going the GSM way but it was Mukesh who went the CDMA way. One another main reason is, India has 80% GSM subscribers and continue to grow at a faster rate than that of CDMA operators.(Reliance & Tata Indicom). Indians are carzy about fancy handsets. Investments in CDMA handsets locks you to that operator. Also CDMA users have limited handset choices. Officials from rival GSM operations were also of the opinion that Anil could be just speculating and blocking other Telcos from getting the spectrum – like father, like son.

Call it Anil’s ego to KILL Mukesh’s baby(Reliance Infocom) or embrace the superior GSM technology, Reliance Telecom has got a Thumbs Up from the Ambani. Sky is the limit for Reliance Telecom now.

Author: Webmaster