RCom likely shutting down its wireless business next month
Mukesh Ambani led Reliance Jio made things difficult for all other telecom operators in India. The company began its onslaught by offering freebies to its customers last year, and, earlier this year, the company announced some super affordable data plans which were deemed “predatory” by other telcos. These tactics of Jio resulted in incumbents incurring losses on their end. While telecom operators are now catching up with Jio, smaller telcos like RCom are amongst the ones that have been hit the worst. Last month, the company shut down its services in Gujarat, and now, the company is reportedly shutting down its wireless business across the country.
According to a report by ET, Anil Ambani led RCom is going to shut down its wireless business across the country on November 30. The employees have been put on notice period, and, needless to say that their last date of employment would be November 30.
The “creative destruction” brought in by Reliance Jio in the form of free voice calls and cheap 4G data has been cited as one of the many reasons for the shut down of RCom’s wireless business.
“We stand at 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.” said Gurdeep Singh, Executive Director of Reliance Telecom to its employees.
“Segment wise – ILD voice, consumer voice and 4G dongle post-paid will be migrated to 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 license. So that will also mark our exit from DTH business. So that is restructuring of overall wireless and consumer business.” Singh further added.
According to the report, RCom will keep its tower business operational, and, is also in talks with Canada’s Brookfield to sell its stake in its tower business.
Citing people familiar with the matter, the report further states that RCom will shut down its 2G operations and will focus only on its 3G and 4G services.
It’s also worth noting that RCom is currently under a debt of ₹47,000 crore, and, it was planning to pay off ₹25,000 crore of it through a merger with Aircel and selling off the stake to Brookfield. However, the company does have an alternate plan which involves the sale of tower, spectrum and real estate assets. Well, with so much of debt, it’s not surprising to see RCom shutting down its wireless business.