Reliance Communication could be closing down significant parts of its wireless business in the next 30 days, blaming the destruction brought in by the new entrant, Reliance Jio’s free voice and cheap data services. It is believed that the employees have been given a notice of 30 days with their last date being November 30.
It is believed that Gurdeep Singh, executive director of Reliance Telecom told the employees that the company is at a situation where they need to call it a day on the wireless business and it would bring down the curtains 30 days from now. He also mentioned that the company had tried all means to sustain and put oxygen into the business but will not be able to sustain it beyond 30 days from now.
When talking about segments, it was mentioned that ILD voice, consumer voice and 4G dongle postpaid will be migrated to an enterprise as long as it remains profitable. Apart from these three, everything else will be shut down. The company has published in the newspapers that their DTH license is expiring on 21st November and they are not planning to renew the license. This will mark an exit from their DTH business which has led to the restructuring of the overall wireless and consumer business.
The tower business will continue to operate since it is bringing in significant business with the tenacities with Jio and other private operators. Reliance Communication is currently in talks to sell its stake in the tower unit to Canada’s Brookfield. The company is also planning to close down the 2G operations and weed out its low average revenue per user generating subscribers and focus only on the profitable parts of the 3G and 4G services, these services could be housed under the enterprise business and help cut losses.
The business has faced many challenges starting from giving up the CDMA business which forced them to let go of customers, long time consumption to merge the Sistema Shyam Teleservices with Reliance and the proposed merger with Aircel which had to be cancelled due to various reasons including court cases. The creative destruction of Reliance Jio Infocomm is also a reason behind this call since it crippled many players across the industry which earlier got their revenues mainly from the voice business. Jio had made voice calls free for its customers since the launch.
The company is also undergoing a strategic debt restructure program and the merger with Aircel combined with its stake sale to Brookfield was a crucial plan to shear about Rs.25,000 crore from its Rs.47,000 crore debt. The first deal is off and the second one is being renegotiated downwards, the operator will have to chalk out an alternate plan which involves the sale of real estate assets, fibre, spectrum and tower which could generate more than Rs.25,000 crore which could be used to repay the lenders.
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