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UBS Investment Research
India Mobile Sector
RCom’s 3G plans indicate no price war
„ RCom launches 3G services in 3 metro cities
Reliance Communications (RCom) has launched 3G services in 3 metros cities of
Delhi, Mumbai, & Kolkata and in Chandigarh. RCom offers combo plans (voice &
data), mobile data plans, 3G USB data cards and mobile TV services as a part of its
3G offerings. Combo plans range from Rs199-Rs2,499 offering 300-6,000 minutes
of talk time with 50MB-5GB of data usage. Monthly mobile data plans range from
Rs100-Rs2,100 offering free data usage of 100MB-21GB. RCom plans to launch
3G services in its 13 3G licensed service areas by Mar11.
„ UBS View: Pricing likely to be rational
RCom’s 3G launch adds another data point to our thesis that the pricing
environment is likely to remain stable. Also at first glance, RCom’s 3G services
seem to be priced at a premium to Tata DoCoMo’s 3G offerings. This clearly
shows that RCom, under new wireless head Syed Safawi, is focussed on gaining
revenue market share and improving profitability.
With the launch of 3G services, wireless data is likely to be a growth area. We
believe that RCOM, with its CDMA and 3G spectrum coupled with optic fibre
network, is well positioned to ride the wireless data boom. We reiterate our Buy
ratings on Bharti and RCom, and our Sell rating on Idea. While Bharti will benefit
from regulatory developments and positive data points coming out of Africa, our
bullish thesis on RCom is premised on an operational turnaround. Bharti is our top
pick in the Indian mobile space currently, whereas RCom is a contrarian call for
investors with higher risk appetite.
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