RCom to scale back mobile operations in India

Indian operator Reliance Communications (RCom) plans to shut sown major parts of its wireless business in the next 30 days to reduce losses, blaming, among other factors, the "creative destruction" brought by Reliance Jio’s free voice services, The Economic Times reports, citing RCom executive director Gurdeep Singh. "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," Singh said.

RCom says this decision is in line with its earlier announced strategy. At the beginning of this month, RCom said it decided to adopt a 4G-focused 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 30 November, the company said.

"The company’s 4G-led strategy will be executed, as at present, on the back of capital-light access to India’s most extensive 4G mobile network, through already operational spectrum-sharing and ICR arrangements with Reliance Jio," RCom also said.

"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. “All of us need to move on — 30th November is our last working day... All of us need to move on, from HR process perspective, all of us need to put in our resignations which is obvious," he added. 

According to an unnamed RCom official, the company intends to initially shut down its 2G operations, and gradually end its 3G services, eliminating low ARPU subscribers and focus on only the profitable parts of the 4G business. This means nearly 40 million 2G subscribers of RCom’s total 75 million users would need to shift to a new operator. Part of the rest of RCom’s users are using 3G services.

"Segment wise, ILD (international long distance) voice, consumer voice and 4G dongle post-paid will be migrated to enterprise as long as it is profitable," Singh also said. RCom shared or sold most of its 4G spectrum in the 850 MHz band to Jio in India and also has tower and fibre sharing pacts with the new entrant. Singh also said RCom will start shutting down sites that make little profit and ensure that customers exhaust their balances. 

According to Singh, RCom’s tower business will remain operational since it is generating revenue via tenancies by Jio and other private operators. RCom is in talks to sell its stake in the tower unit to Canada’s Brookfield.

The company also confirmed that it plans to exit the DTH business in India. Reliance BigTV's licence expires at the end of November, and the company said it's in talks with three other DTH providers to take over the Reliance customers.