Reliance Communications (RCom), the telecom company led by business tycoon Anil Ambani has decided to shut down its 2G operations by November 30. As the company is debt-ridden, the authorities decided to pull the brakes on its 2G mobile business within a month and show the door to several of its employees.
The company’s 2G-based customers will be migrated to 3G/4G based technology and have asked the majority of its employees to exit the company by November 30. And the debt-ridden company will continue to operate 3G and 4G services until the time they remain profitable, sources said.
The company has cited cut-throat competition in the sector, especially services from a new entrant. Blaming among other factors, the ‘creative destruction’ brought in by Reliance Jio’s free voice and cheap data services.
“We stand in a situation where we need to call it a day on our wireless business and this would bring the curtains down on our wireless business 30 days from now. And as a result, we tried whatever means to sustain and put oxygen in the business but we will not be able to sustain the business beyond 30 days from now,” Gurdeep Singh, executive director of Reliance Telecom, who was also the CEO and co-CEO of the mobility business, is believed to have told employees Tuesday.
On October 1, RCom had called off its merger plans with Aircel, citing regulatory and legal hurdles, and later moved the National Company Law Tribunal (NCLT) seeking withdrawal of the merger scheme. This had cast over the operators’ future as the merger was seen as vital for their survival in the competitive telecom sector.
“Segment wise – ILD voice, consumer voice and 4G dongle post-paid will be migrated to an enterprise as long as it is profitable. But besides these three, everything else will be shut down. We have published in newspapers that as our DTH license is expiring on 21st of November and we are not renewing the license. So that will also mark our exit from DTH business.
Reliance Communications (#RCom) to Shut Down its GSM Mobile Services / Wireless Business by 30th November#Exclusive Details 👇 pic.twitter.com/yapn3SOHWE
— SANJAY BAFNA (@sanjaybafna) October 25, 2017
So that is a restructuring of overall wireless and consumer business,” Singh added. The move comes after the company, reeling under debt of around Rs. 46,000 crores, failed to close to its wireless business merger deal with Aircel in the beginning of this month. RCom and Aircel in September last year had signed a binding agreement to merge their mobile businesses.
But, on Sunday, RCom announced that the agreement had lapsed owing to legal and regulatory uncertainties, objections by interested parties and delays in receiving relevant approvals.
Meanwhile, with Department of Telecom recently clearing merger of wireless business Shyam Sistema Teleservices Limited (SSTL) into RCom, the company stands to gain 30 MHz of 800/850 MHz band spectrum along with 2 million subscribers and additional annual revenue up to Rs 700 crore. The new spectrum will also allow RCom to accommodate existing users upgrading from 2G network to 4G.
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