India's RCom to Shutter Operations – Report
India's Reliance Communications looks set to close most of its wireless business over the next month, according to press reports, and is believed to have told most employees that November 30 will be their last day of employment.
The operator, which maintains India's sixth-biggest network by customer numbers, was only recently in the news after a proposed merger with Aircel Ltd. , the country's No. 5 player, fell through. It was thought to be exploring various options, including spectrum and real estate sales, to address its huge debt of about 450 billion Indian rupees ($6.8 billion), even though its acquisition of smaller rival Sistema Shyam TeleServices Ltd. was recently cleared by the Department of Telecommunications. (See India's RCom Eyes Asset Sales After Aircel Merger Collapses.)
What is clear is that the company's DTH license will expire on November 21, and Reliance Communications Ltd. has decided not to get that renewed. This would clearly mark the closure of its DTH operations.
In the meantime, RCom plans to migrate its ILD voice, consumer voice and 4G dongle post-paid operations to its enterprise division, which will remain operational as long as it is profitable. "But besides these three [units], everything else will be shut down," Gurdeep Singh, RCom's CEO, has been quoted as saying in media reports. Under these plans, RCom would effectively shut down its entire 2G business and move 2G subscribers over to its 3G and 4G networks.
India's telecom market is currently witnessing a wave of consolidation triggered by the predatory pricing policies of Reliance Jio , whose owner -- Mukesh Ambani -- is the brother of RCom Chairman Anil Ambani.
The sector is reeling from layoffs as operators merge or quit the market. Hit particularly hard by RJio's tactics, smaller telcos such as Telenor and Videocon Telecommunications Ltd. were forced into sales of their businesses. Redundancies now look set to increase dramatically with RCom's exit moves. (See Indian Telecom Industry Set for Huge Layoffs.)
Even the industry giants have been affected by RJio's market entry in late 2016. Vodafone India and Idea Cellular Ltd. , the number two and three players, decided to merge their operations earlier this year, while Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India’s largest service provider, has acquired the consumer mobile business of Tata Teleservices, as well as Videocon, Telenor India and Tikona Digital Networks Pvt. Ltd. in the last few months.
RCom's disappearance would mark a dramatic continuation of this trend, with its founder ultimately responsible for its demise. Mukesh Ambani launched the business years ago, and through its Monsoon Hungama promotion is credited with lowering voice tariffs in India while in charge of the company. RCom was also known for the strength of its data dongle business before Airtel and other incumbents launched their own 3G-based data dongles. Mukesh was subsequently forced to abandon his telecom ambitions because of a family feud, but is now back in the market with fresh purpose.
At one time there were rumors that Mukesh would acquire RCom's infrastructure and subscriber base to beef up. Sadly for RCom, that was not to be.
— Gagandeep Kaur, contributing editor, special to Light Reading