This paper presents a new approach for evaluating the performance of single-input multiple-output (SIMO) cellular mobile communication systems in interference limited environment. The performance is analyzed by calculating the ergodic capacity and hence the spectral efficiency for Rayleigh fading SIMO channel in the presence of unequal power Rayleigh fading co-channel interferes. Expressions for evaluating system’s capacity using maximum ratio combining (MRC) are presented. The analytical results are verified by developing Monte Carlo simulations. Finally, the effect of variation in cellular parameters including cell size and re-use distance on the system’s performance is studied. It is shown that the employment of multiple antennas at the receiver can significantly improve the performance of the system. The capacity limits defined by MRC analysis are found within the estimated values of capacity using simulation. It is observed that increasing cell size and re-use distance decrease the effect of co-channel interference, however, the overall area spectral efficiency (ASE) of the system reduces due to the increase in cellular coverage area. Thus, a trade-off between capacity improvement and reduction in cell-size is suggested.