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Reliance Communications Renewing Focus On Its CDMA Services

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Reliance Communications (RCOM) is renewing focus on its CDMA business now that its CDMA voice revenues is almost stabilizing and the CDMA handset ecosystem is improving in the country, the company CEO (Wireless) Gurdeep Singh disclosed during its earnings conference call for the quarter ended December 31, 2013 (Q3-FY14).

Singh says they have taken several CDMA oriented initiatives recently like launching GSM+CDMA smartphones, introducing a dedicated CDMA team within its mobility business and upgrading its EVDO network to Rev B in non-3G circles. However, he didn’t provide any split of of RCOM’s CDMA and GSM revenues.

On reports of RCOM restructuring its CDMA business, Singh says they are changing the go-to-market strategy of its CDMA business, due to which it has now created a CDMA organization structure since the characteristics of sales and distribution are entirely different from GSM. CDMA is a device‐bundled business while GSM is a SIM card led business. This structure has been setup so that the distribution, people and the go‐to‐market strategies are aligned to do bundled sales, which a GSM team is never used to selling.

Singh also mentions that there are couple of other factors which has led to the telco re-focusing on the CDMA business:

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Emergence of Universal Chipsets: Firstly, Qualcomm and other vendors have increased manufacturing chipsets which support both CDMA and GSM, which has led to an increase in the availability of CDMA devices. These vendors have apparently indicated that by the end of 2015, the industry will be moving towards universal products which support a universal SIM, thereby increasing the possibility of a CDMA SIM being put into a GSM phone and it will work on CDMA network.

Introduction of GSM+CDMA Devices: Secondly, smartphone manufacturers like HTC, Lenovo and Apple have introduced several high-end devices in the US and other countries, which work seamlessly on GSM & CDMA and these manufacturers are now looking to launch similar mid and low end devices.

Low competition in CDMA Services: Thirdly, RCOM claims it sees an opportunity to offer high speed data services through its 800MHz network currently deployed in the market, with the weakening spectrum position of its CDMA competitors. Remember that Sistema which operates its telecom services in India as MTS India is probably the only other telco which is focusing on the CDMA services in the country, with Tata Teleservices surrendering 20MHz CDMA spectrum in December 2013.

Sistema was also the only participant in India’s March 2013 CDMA spectrum auctions, while there were no participants in the November 2012 CDMA spectrum auctions after Tata Tele and Videocon had withdrawn their respective bids prior to the auction. However, the telco has spectrum only in eight circles in the 800 MHz band right now while RCOM has pan-India CDMA spectrum.

Our Reliance Communications Q3-FY14 Earnings Coverage

– RCOM extends its EMI-like device tie-ups to Lumia & HTC Devices; Plans for more
Reliance Communications Had 11.1M 3G, 36.2M Mobile Internet Connections At End Of Q3-FY14
RCOM Non-Voice Revenues Flat For Q3-FY14

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