Dec. 7 (Bloomberg) -- Reliance Communications Ltd., India's second-largest mobile-phone operator, received an amended license to expand services in the world's third-biggest wireless market by users.

The carrier's existing global system for mobile communications, or GSM, network will be extended throughout India ``in due course,'' Mumbai-based Reliance said in an e-mailed statement today. The operator has a nationwide wireless network on the competing code division multiple access, or CDMA, standard.

Operating two networks would likely help Reliance gain market share from competitors including market leader Bharti Airtel Ltd. and Vodafone Group Plc's local unit. A court has delayed the allocation of airwaves for GSM, the most widely used wireless technology, after its rival operators challenged the government's decision to allow Reliance to extend its GSM network.

``It is positive for Reliance Communications because the GSM market is much larger,'' said Mahesh Patil, who helps manage $800 million in stocks at Birla Sun Life Asset Management Co. in Mumbai. ``But the whole spectrum issue needs to be resolved before; any delay in allocation of spectrum to Reliance is positive for Bharti as it will continue to expand.''

Reliance shares gained 1.6 percent to 730.20 rupees at 12:54 p.m. on the Bombay Stock Exchange, after earlier climbing as much as 5.1 percent. They have gained 56 percent this year, compared with a 44 percent increase in India's benchmark Sensitive Index.

Reliance on Oct. 19 paid 16.51 billion rupees ($419 million) to offer mobile-phone connections based on GSM, and said it plans to extend the GSM service to all 22 of India's designated telecommunications zones from the current eight.

Most Airwaves

Reliance will hold the most airwaves among the Indian operators if it acquires the GSM spectrum as well, said Naveen Kulkarni, an analyst at Religare Securities Ltd. in Mumbai who rates Reliance as a ``hold.''

``They still require spectrum in order to start planning the GSM operations,'' said Kulkarni. Reliance's subscriber growth would likely accelerate after gaining the airwaves because GSM is ``the dominant technology,'' accounting for about 70 percent of India's phone users, due to the availability of handsets, he said.

India can't allocate additional airwaves for providing mobile-phone services to operators including Bharti, Reliance and Vodafone Essar Ltd. until Dec. 12, a court ruled last month after receiving the petition from the Cellular Operators Association of India, a group representing the GSM carriers.

The COAI said on Oct. 23 that it filed the petition against the government move to allow Reliance and other CDMA operators to offer GSM services as well.

Airwaves or spectrum are radio frequencies that can be used to provide wireless services.

All the carriers are seeking additional spectrum from the government after record subscriber growth crowded airwaves and resulted in poor call quality.

``The lack of spectrum will prevent the entry of new players into GSM'' including Reliance, Patil said today.

To contact the reporter on this story: Shailendra Bhatnagar in New Delhi at sbhatnagar3@bloomberg.net; Mark Lee in Hong Kong at wlee37@bloomberg.net.

Last Updated: December 7, 2007 02:31 EST