RCom gets govt nod for GSM services

RCom gets govt nod for GSM services
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First Published: Fri, Oct 19 2007. 01 11 PM IST
Updated: Fri, Oct 19 2007. 01 11 PM IST
Mumbai: Reliance Communications Ltd said on 19 October it had approval to launch nationwide GSM services, the country’s dominant mobile platform, sending its shares up by more than 5% before a falling market weighed.
Reliance Communications, 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.
Trade data showed it added 1.5 million subscribers in August, lifting total customers to 34.8 million and giving it a 17% market share, second only to Bharti Airtel Ltd .
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 1 October 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 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% of potential customers signed up.
So gaining market share would be challenging, said Lehman, which also has an “overweight” rating on Reliance Comm stock.
Reliance Communications, which offers local call rates as low as Re0.09 (less than 1 US cent) a minute, expects the country’s wireless user base to more than double to 500 million by 2010.
Its shares rose more than 5.2% in early trade, but surrendered those gains in a weak market. At 0718 GMT its shares were up 0.5% at Rs714.9 in a Mumbai market that was down 3%.
Shares of Reliance Communications, valued at $38 billion, trade at 31.6 times forecast earnings, compared to 28.4 times for Bharti Airtel, whose shares were down 6.8% at Rs950.
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First Published: Fri, Oct 19 2007. 01 11 PM IST