Reliance ‘postcard prices’ push customer base past million mark

21 May 2003

Reliance Industries [Bombay: RELI], the largest company on the Indian stock index, claims that its new CDMA phone service has pushed its telecoms subscriber base past the one million mark just ten weeks after launch, by making its phone calls, in its chairman’s own words, ‘cheaper than a postcard’. Following the death of the group’s founder Dhirubhai Ambani last year, Reliance – traditionally an oil refiner and polyester manufacturer – has moved into numerous new markets to offer everything from electricity to telephony. Now led by Ambani’s sons, Mukesh and Anil, the group is using its extensive fibre-optic network and stock of raw materials to pass on cheaper services to its telecoms customers.

The group’s 48%-owned communications arm Reliance Infocomm became the first operator in India to launch CDMA services, in February this year, and has since come under heavy fire over its pricing policies. Since launch it has charged customers the equivalent of just one US cent per minute for long-distance calls as it looks to ensnare the 750 million-plus Indian consumers earning less than USD1,500 a year. The price plan has angered rival GSM operators, including Orange and AT&T, which claim Reliance is acting unfairly and have appealed to the high court to intervene. Reliance claims that the strategy is paying off and, despite initially limited network coverage of only 100 of the country’s 673 cities, says that the CDMA service has now pushed its total subscriber base past the one million mark. Around half of that figure is made up of Reliance’s GSM subscribers, whilst it also offers wireline, WiLL and broadband services.