RCom Kicks Off 4G Migration

India's fourth-largest service provider, Reliance Communications, is planning to migrate its five million CDMA subscribers to Reliance Jio Infocomm's yet-to-be-launched 4G network in the coming months.

Reliance Communications Ltd. aims to move CDMA subscribers over to GSM technology before they finally end up on Reliance Jio 's 4G system. The two operators signed a spectrum-sharing agreement earlier this year under which 4G services will be offered to RCom's subscribers. (See RJio & RCom Enter Spectrum-Sharing Pact .)

While customers will remain with RCom, the services will be delivered over RJio's 4G network. This is a perfect strategy for the debt-laden RCom, which will be able to avoid making huge investments in its own 4G network. RCom will also eliminate the risk of competing against and losing 4G customers to RJio. Its strategy therefore promises both capex and opex savings.

But the migration of CDMA subscribers to RJio's 4G network is unlikely to be without issues. To begin with, the company would need to offer significant device subsidies to persuade its customers to choose 4G services.

These subsidies would be hard to bear for the indebted player. Ratings agency Moody's recently downgraded RCom from stable to negative because of delays to the sale of its tower business. The operator has been planning to hive off its tower business for a long time but without much success.

Another issue for RCom is comparatively low customer spending among those using CDMA technology. Average revenue per user (ARPU) among CDMA customers was around 106 Indian rupees ($1.5) per month at the end of September 2015, while that for GSM subscribers was about INR122 ($1.8).

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RCom has also recently acquired India's only pure-play CDMA operator, Sistema Shyam TeleServices Ltd. , which operates under the brand name of MTS India. It was also quite recently reported to be in talks with Aircel regarding a possible acquisition of assets. (See RCom-Aircel Fine-Tune Merger Terms and MTS India Merges With RCom.)

Under the scheme with RJio, RCom will start the 4G migration process in the four circles (service areas) of Haryana, Himachal Pradesh, Uttar Pradesh and Odisha. These will be followed by the metropolitan cities of Mumbai and Delhi. RCom hopes to complete the migration process by August 15, India's Independence Day.

The company will join the other incumbents -- Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Vodafone India and Idea Cellular Ltd. -- which are already offering 4G services in the country. RCom may need to ensure that competing with those companies does not damage its profitability.

— Gagandeep Kaur, contributing editor, special to Light Reading

dr.faramroze 4/16/2016 | 5:30:23 AM
Bad idea While initially it appeared to be a game changer strategy for luring new technology maniacs but if RCOM plans to shut off CDMA network and force the users on GSM, then these cdma customers would never use Reliance GSM. The qos of cdma is far above expectations where Reliance gsm is concerned. Gujarat and Maharashtra has the highest number of Reliance CDMA customers and forcing them into GSM will be deadly for the company. In spite of the problems faced during normal operations like sim change, evdo plan activation etc, customers clung on to CDMA for all these years. The company has the right to pull down CDMA services from very low customer states but it will be injustice if done to revenue yeilding states. The actual luxury of using CDMA network is the US imported smartphone which gives that high-end feeling. Customers paid even more than market price per handset just to be on Reliance CDMA. Jio 4G offers LTE as data stream currently with a fall-back signal on 2G GSM. The call handshake of Reliance GSM is not worth the closedown of cdma. 4G LTE cannot be deployed highway to highway, small villages, towns so 4G penetration is just a bit more than it's campaigns. Apart for the larger cities, the whole backbone is based on edge-2g. RCOM should value it's old legendary customer base of CDMA and make an upgrade like one sim for LTE/evdo/1xcdma. 
iainmorris 4/14/2016 | 6:31:46 AM
RJio launch The entry of RJio into the market is clearly going to have a big impact but when's it going to happen? The operator seems to be way behind it's original schedule now, which makes you wonder about the difficulties they may be having. Press reports from India are suggesting a proper commercial launch won't happen until the second half of the year -- I think the original target was December.
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