The foray into GSM will give RCom access to customers who have so far shunned it. For all the virtues of CDMA, it has given RCom largely the low-end customer. The average revenue per user (ARPU) for CDMA operators is about Rs 100 lower than that of GSM operators. Given the low ARPUs in the country, that difference works out to over 50 per cent.
"RCom's CDMA network has a large number of users, but from a revenue point of view, its quality of customers is low. It has low ARPUs because the large majority of its customers is at the low end. That must hurt Mr Anil Ambani," says Mahesh Uppal, director, Com First India.
The other incentive to get into GSM is spectrum, the radio frequency on which mobile signals travel. It is a valuable and scarce resource. "GSM gets more spectrum than CDMA for the same price (for start-up, it's 4.4 MHz for GSM and 2.5 MHz for CDMA). Since GSM spectrum has a great demand, there is no risk. Besides, it is significantly underpriced," says Uppal.
Image: Indian actor Aamir Khan holds a new Samsung mobile phone during a promotional event by Samsung mobile in Mumbai. | Photograph: Sajjad Hussain/AFP/Getty Images
Also read: US crisis: Boom time for law BPOs in India
Powered by 
| Live updates on money.rediff.com |
|
Advertisement
