Anil Ambani-led Reliance Communications (RCom) has decided to shut down its 2G wireless services due to heavy losses. Debt-laden RCom is shutting major parts of its wireless business in the next 30 days.
“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,” RCom executive director Gurdeep Singh said at a company-wide town hall on Tuesday.
RCom, with debts of ₹47000 crore. RCom shares fell 3.4% on the BSE (Bombay Stock Exchange) lower at ₹16.45 on Wednesday (currently at ₹16.05), valuing the company at ₹4,094 crore.
The company’s 1,000-1,200 employees put on a notice period and asked to resign by 30 November.
“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 Singh.
RCom has more or less 76 million subscribers of which about 40 million use its 2G network. Most of the rest is on 3G and others on 4G. An RCom official said separately that the company is planning to shut its 2G operations in the first place and after that 3G operations will go down.
“We will ask our 2G and 3G customers to upgrade to our 4G network as we are making losses in the 2G business.”
“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.”
According to sources RCom facing massive losses on 2G operations:
Loss/Day—-> Rs. 70-80/Customer
Loss/Month—> Rs. 50-60 cr.
So RCom eventually decided to high-profit-margin business that indicating that they’ll be focusing on 4G services from now on.
So What’ll Rcom Customers Do?
Existing 2G customer will be upgraded automatically to 3G
Or they can port out to any other operator.
RCom Exit Plan?
RCom’s DTH television license expires on November 21 and they have no plan to renew it. So RCom is also shutting down its DTH (direct-to-home) operations.
Those losing jobs at the end of November will get their salaries for September and October on time and their final settlements by January 15, 2018.
RCom has shared or sold most of its 4G spectrum in the 850 MHz band to Jio across India and also has tower and fiber sharing pacts with the new entrant.
The company’s tower business will remain operational since it is bringing in business.