RCOM Rs 3,000-cr GSM expansion

With its plans to launch pan-India GSM operations being delayed, Reliance Communications (RCOM) is now embarking on a Rs 3,000-crore ($740 million) plan to add 17 million new lines to its existing GSM networks in eight telecom circles. Over the next nine months, RCOM proposes to beef up the total capacity of its eight GSM networks — Kolkata, West Bengal, Orissa, Bihar, North-East, Assam, Madhya Pradesh and Himachal Pradesh — to 20 million lines from a little over three million now.

The company’s cost per line for adding 17 million GSM lines at a capex of $740 million works out roughly at $43. If this GSM expansion project goes per plan, by March 2008, RCOM’s GSM coverage is slated to extend across 9,000 towns and three lakh villages.

For its Rs 3,000-crore plan, RCOM will source GSM equipment from three vendors — Alcatel Lucent, Huawei and ZTE Corp.In its response, the RCOM spokesperson said: “A large-scale network expansion is underway in the eight existing GSM circles, which on completion would multiply the existing network capacity, thereby enabling RCOM to offer the widest network reach to many million customers in these circles. We can’t share specifics on the precise outlay or the vendors but we have been in talks with Alcatel Lucent, Huwaei and ZTE.”

RCOM had initially planned to launch GSM services on a pan-India level during the current fiscal. The company had applied for GSM spectrum in 15 circles over a year ago but has so far not been allocated spectrum. RCOM is set for a long wait as the government is yet to decide whether companies can offer both GSM and CDMA technologies with the same licence.

Telecom regulator Trai is currently carrying out a consultation process seeking the industry’s views on reviewing key licence conditions. The process also seeks to re-work the existing merger and acquisition guidelines and also find answers to the crucial question of whether operators can be allowed to provide both GSM and CDMA-based services in the same circle. If there is consensus that players should be permitted to offer both CDMA and GSM services, the process will then lay down guidelines to specify both priority and methodology to be followed for spectrum allocation in such cases, Trai has said. All stakeholders have time till Friday (July 6) to submit their comments on these issues to the regulator.

Stage two of RCOM’s pan-India GSM play can only crystallise once department of telecom (DoT) takes a call on the company’s application for GSM spectrum in the other 15 circles. At the same time, RCOM has invited separate bids for about 75 million GSM lines for these 15 circles in what is said to be the world’s biggest telecom tender, valued at nearly $7-8 billion. Over five network majors, including Ericsson, Huwaei and ZTE, are learnt to have submitted their proposals in response to RCOM’s requests for proposal, but the company is expected to finalise the deal only after the DoT issues guidelines on the new licence conditions, industry sources said.

RCOM’s existing GSM networks will be EDGE-enabled and 3G-ready, said company sources. The mobile network equipment is likely to include the gamut of active electronics for DELs (digital exchange lines) from service support nodes, gateway support nodes, and media gateways. Incidentally, the Rs 3,000-crore investment plan to reinforce GSM networks is part of the $2.5 billion (Rs 10,000 crore) capital expenditure plans for the current fiscal.