India's Reliance Preparing US$5.6 Billion GSM Tender

India's Reliance Communications (RCom) is reported to be preparing for a massive GSM tender which could be worth as much as US$5.6 billion. The contract is expected to be for some 70 million GSM lines, and dwarfs the troubled 22.7 million GSM lines contract from state controlled BSNL.

"We are already in discussions with equipment vendors for the GSM roll-out, and in addition, we are also expanding our passive infrastructure of telecom towers that could be used for GSM services across the country," a senior RCom executive, who preferred anonymity, told The Mint newspaper. "The roll-out will be quick, especially since we have our own tower network."

RCom has aparently already begun talks with telecom vendors such as Ericsson, Alcatel-Lucent and Motorola.

"RCom is talking about a contract that could be for as many as 70 million lines and it is a tough customer," the newspaper cited a senior executive at a European vendor as saying.

There could be some issues over the price though - as RCom is reported to be pushing hard to get the price down to a mere US$50 per GSM line. The US$5.6 billion is based on a cost per line of US$80 which is understood to be the current starting point in negotiations. For comparison, the recent BSNL tender was won by Ericsson offering US$90 per line - which in turn undercut its rivals at Nokia Siemens by a significant margin. Quite how RCom will be able to push for an even lower price remains to be seen.

According to Mumbai-based Macquarie Research, the company will launch GSM services across the country next year. "We expect RCom to have a GSM subscriber base of 12.8 million by March 2009, 21.6 million by March 2010 and 28.6 million by March 2011,"

RCom already operates a GSM network, and though clever use of CDMA licenses has become the country's largest CDMA operator. The company's CDMA network has been engaged in a sharp price war with the GSM operators, and it is presumed will seek to undercut the GSM service when its national network is ready. According to figures from the Mobile World, RCom had some 31.3 million CDMA subscribers at the end of September along with 5 million GSM customers.

On the web: The Mint - The Mobile World

Posted to the site on 30th November 2007