Reliance to disrupt CDMA Services ahead of 4G Launch

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In 2002, the Ambani brothers-Mukesh and
Anil, had stepped on a rather challenging and less popular Code Division
Multiple Access  (CDMA) technology in
their telecom business, wherein the world was getting adapted to the Global
System for Mobile Communication (GSM) technology. 
But, 14 years after backing the CDMA
technology, Reliance Industries Ltd chairman Mukesh Ambani’s telecom services
bet on the fourth-generation long-term evolution (LTE) technology is ironically
set to relegate the CDMA radio technology. 
The CDMA never had the hold on the
telecom market unlike GSM. As on 31 December, 2015, CDMA had less than 5% share
of the total wireless subscriber base in India, according to the Telecom
Regulatory Authority of India (TRAI). CDMA
subscribers accounted for just about 47 million of the total 1.1 billion
wireless users as on 31 December. The rest are GSM subscribers.

Now, the Reliance Communications’ success in
lobbying the government to allow telecom companies operating on the CDMA
platform to also use the GSM technology has pushed the technology to the back

Reliance Jio has spent 1.2 trillion in
financial year 2015-16 for the 4G launch.

“As we approach the launch of
fourth-generation (4G) services by Reliance Jio Infocomm Ltd (R-Jio), we
believe it could likely mark the end of CDMA services,” Sanjesh Jain,
research analyst, wrote in an ICICI Securities Ltd.

“It is critical for R-Jio as completion
of 850MHz (megahertz) spectrum refarming by R-Com infers that R-Jio could use
the spectrum (through sharing/trading route) for its 4G-850MHz pan-India
launch. R-Com has already vacated 850MHz in nine circles. Due to strong data
card business, 55% of CDMA revenue comes from post-paid, which could be a low
hanging target for R-Jio,” added the ICICI Securities report.

Meanwhile, sources say that Reliance
Communications is expected to complete the migration of CDMA to 4G LTE service
by mid-August, as most of its customers have already opted for the offered
upgrade to 4G LTE services.

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