Its the costs stupid: Reliance Comm

Posted on | September 25, 2006 |

Surajeet Das Gupta writes in Business Standard that Reliance Communications has cited cheaper equipment and handset prices as the key reason for shifting of its focus to GSM.

Raising concerns about Qualcomm’s policies (as it is a key reason for the high CDMA costs), the company, including Ambani, in its discussions with analysts has pointed out that the CDMA handset ecosystem has many challenges and the Qualcomm approach in no way helps them to bring down the affordability index for millions of customers.

Reliance recently made an application to the DoT for GSM spectrum across the country. In the seven circles in India where Reliance Communications currently operates GSM and CDMA, subscribers are equally divided between the two. The company has 2 million subscribers each in GSM and CDMA networks in these circles.

It has also hinted that of the incremental $900 million capital expenditure in wireless telecom services, which the company will make next year, a large chunk could go towards building GSM networks…

The challenges they face with Qualcomm include issues of royalty, chipsets and whether they can deliver value and low-cost solutions.

Reliance has also pointed out at that the spectrum situation is not as dismal as it seems and is limited only to the top 20 cities. And even here the government will be releasing a big chunk.

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