Anil Ambani’s Reliance Communications likely to shut down 2G mobile business by November 30
New Delhi, October 25: Reliance Communications decided to move its 2G-based customers to 3G/4G based technology and asked majority of its employees to leave the company by November 30. Reliance Communications will continue to operate 3G and 4G services till the time they remain profitable.
At present around 60 per cent of its customers who are using 2G-based technology will be asked to either migrate to better technology or port out to some other operator. The company is in the middle of a strategic debt restructuring plan and lenders have an option to convert part of their loans to equity by December 2017.
Reliance Communications is in a standstill agreement with banks under which it need not pay any interest or principal to the lenders till December 2018. Reliance Communications is also shutting down its direct to home television business from next month after it failed to find any buyer for the business.
Gurdeep Singh, the Reliance Communications Executive Director told the employees that the company reached a situation where it would be shit down after 30 days from now.
Reliance Communications will operate International Long Distance voice, consumer voice and 4G dongle post paid services and mobile tower business till the time it will be profitable and all other business will be shut down. Reliance Communications has a loan of Rs 44,000 crores and it is finding hard to service its dues to increased competition.
A merger between Reliance Communication and Aircel was collapsed in October because there was delay in getting approvals from the courts and other authorities. This also impacted their deal with Brookfield to sell its telecom towers for Rs 11,000 crore.
Reliance Communications was about to use their funds to repay its loans. Reliance Communications and Aircel Limited signed binding agreements in September 2016 for the merger of their mobile businesses.
But the Supreme Court is still hearing a 2005 case on the acquisition of Aircel by Maxis, the Department of telecom refused to give its permission to the merger. Besides various creditors including Ericsson and China Development Bank objecting to the merger proposal at the National Corporate Law Tribunal (NCLT), the fate of the merger was sealed.