RCom may close down its wireless business next month

Anil Ambani Chairman Reliance Communications

Anil Ambani's Reliance Communications has made a decision to migrate its 2G-based customers to 3G/4G based technology and has asked majority of its employees to exit the company by November 30.

The 2G business is not all that's going down. RCom's executive director Gurdeep Singh is understood to have informed employees about the development and the closure of a part of the business. Its 3G and 4G services, however, will continue to operate as long as they remain profitable. Blaming among other factors, the "creative destruction" brought in by Reliance Jio's free voice and cheap data services. "Unprecedented competitive intensity in the Indian telecom sector, together with fresh policy directives adversely impacting bank financing for this sector, have also seriously affected industry dynamics, " RCom had also said.

The company will shut down its DTH business - Reliance Big TV - once its licence expires on November 21 and shift users to a different platform. The tower business too is expected to remain operational but RCom is in talks to sell a stake in the tower unit to Canada's Brookfield Group. Reliance Communications was expected to merge its wireless business with Aircel but the merger deal didn't go through due to various reasons.

Refusing to comment on the shutting down of the wireless business, the company issued a short statement, saying it will adopt a 4G focused strategy for profitable growth of its wireless business.

In a major setback for Anil Ambani, Reliance Communications had been forced to called off the move for a merger with Aircel blaming "legal and regulatory uncertainties, and various interventions by vested interests for having caused inordinate delays in receipt of relevant approvals for the proposed transaction".

Meanwhile, with Department of Telecom recently clearing merger of wireless business Shyam Sistema Teleservices Limited (SSTL) into RCom, the company stands to gain 30 MHz of 800/850 MHz band spectrum along with 2 million subscribers and additional annual revenue up to Rs 700 crore. That is, the company is also accommodating its DTS business.

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