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RCom Kicks Off 4G Migration - adithya - 04-15-2016

India's fourth-largest service provider, Reliance Communications, is planning to migrate its five million CDMA subscribers to Reliance Jio Infocomm's yet-to-be-launched 4G network in the coming months.

Reliance Communications Ltd. aims to move CDMA subscribers over to GSM technology before they finally end up on Reliance Jio 's 4G system. The two operators signed a spectrum-sharing agreement earlier this year under which 4G services will be offered to RCom's subscribers. (See RJio & RCom Enter Spectrum-Sharing Pact .)

While customers will remain with RCom, the services will be delivered over RJio's 4G network. This is a perfect strategy for the debt-laden RCom, which will be able to avoid making huge investments in its own 4G network. RCom will also eliminate the risk of competing against and losing 4G customers to RJio. Its strategy therefore promises both capex and opex savings.

But the migration of CDMA subscribers to RJio's 4G network is unlikely to be without issues. To begin with, the company would need to offer significant device subsidies to persuade its customers to choose 4G services.

These subsidies would be hard to bear for the indebted player. Ratings agency Moody's recently downgraded RCom from stable to negative because of delays to the sale of its tower business. The operator has been planning to hive off its tower business for a long time but without much success.

Another issue for RCom is comparatively low customer spending among those using CDMA technology. Average revenue per user (ARPU) among CDMA customers was around 106 Indian rupees ($1.5) per month at the end of September 2015, while that for GSM subscribers was about INR122 ($1.8)


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