Debt-laden Reliance Communications (RCom) has decided to close down its 2G wireless business due to mounting losses.
“We will ask our 2G and 3G customers to upgrade to our 4G network as we are making losses in the 2G business due to free voice calls offered by another telco,” a source in the know of the development told The Hindu . Recent entrant Jio had introduced free offers on both data and voice plans, disrupting the market.
RCom has 81 million subscribers of which about 40 million use its 2G network.
‘30-day deadline’
Reliance Telecom executive director Gurdeep Singh is learnt to have told employees that the company ‘would not be able to sustain the business beyond 30 days.’
When asked for comments, an RCom spokesperson said, “As already announced on October 1, 2017, RCom has decided to adopt a 4G-focussed strategy for profitable growth of its wireless business. Accordingly, RCom will be optimising its 2G and 3G footprint and related infrastructure and human resources, with effect from November 30, 2017.”
“The company’s 4G-led strategy will be executed as at present on the back of capital-light access to India’s most extensive 4G mobile network through already operational spectrum-sharing and ICR arrangements with Reliance Jio,” the spokesperson added, without elaborating.
In June, Anil Ambani, chairman of the firm, had said the country’s telecom sector had cut 10,000 jobs last year and the ongoing stress would further lead to a reduction of 30,000-40,000 jobs this year.
RCom, with debts of ₹46,000 crore, had a ‘standstill’ (or a moratorium on servicing of loans) from lenders till December 2017 to repay ₹25,000 crore failing which the lenders may convert a part of the debt into equity.
With the merger of RCom’s wireless business with rival Aircel falling through, and plans to sell the tower business to Brookfield hitting a stumbling block, the firm is now looking at options, including sale of its realty assets, to stay afloat, a source said.
“Going forward, RCom will look to merge its ILD voice, consumer voice and postpaid 4G dongle operations into its enterprise unit, provided it is profitable to do so,” a source in RCom said. It plans to close down all other parts of its business, with the exception of its towers unit, which has deals in place with other operators, including Reliance Jio.
RCom’s DTH television licence expires on November 21 and it does not plan to renew it, thereby exiting the TV space.
RCom shares fell 3.4% on the BSE to close at ₹16.45 in a firm Mumbai market on Wednesday, valuing the company at ₹4,094 crore.
