New Delhi: Driven by users signing up for its new GSM service, Reliance Communications Ltd (RCom) added nearly five million customers in January, official data showed.
Analysts put RCom’s additions to introductory GSM tariffs, which in some instances were set at zero. But most asked how long it would be able to keep up those tariffs.
Three in every four mobile phone subscribers in India use GSM, or global system for mobile communications.
RCom, India’s second biggest mobile telephony firm by users, counts most customers on its CDMA (code division multiple access, a rival standard) networks, and launched GSM services in the last week of December nationwide.
On Friday, data from the Telecom Regulatory Authority of India showed RCom’s customers grew to 66.3 million on 31 January from 61.35 million in the month before—a jump of 4.95 million, or 8%; a record for any Indian phone firm in monthly additions, RCom said.
This helped take India’s subscriber base to 362.3 million, expanding by 15.41 million, or 4.4%, as on 31 January—the sharpest jump in a month.
“Anyone giving free minutes can easily sell their services but the tariffs are not sustainable. They will rise sooner rather than later and lead to a higher churn rate as compared to the rest of the operators,” a Mumbai-based analyst said on condition of anonymity.
“From an industry standpoint, a key surprise to us is that none of the other operators have reported any slowdown in their net adds for January,” DSP Merrill Lynch Ltd’s Reena Verma Bhasin wrote in a Monday report.
Asking if RCom was encouraging multiple ownership of SIM cards, Citigroup Global Markets India Pvt. Ltd analyst Rahul Singh and co-analysts said the rapid addition would help RCom apply for more spectrum under the subscriber-linked rights norms.
RCom declined to give the January data by GSM and CDMA, but in the last six months of 2008, the firm had an average 1.4 million new CDMA users. If that record has been maintained, some 70% of the January addition at RCom were of GSM phone users.
An RCom spokesperson attributed the January additions to its superior services and pro-consumer approach, without specifically addressing the reservations expressed by some analysts.