Reliance Communications to shut down its 2G mobile business by November 30

Anil Ambani’s Reliance Communications has decided 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 debt-ridden company will continue to operate 3G and 4G services till the time they remain profitable, sources said.

A company official said 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 midst of a strategic debt restructuring plan and lenders have the option to convert part of their loans to equity by December this year. The company is also a standstill agreement with banks under which it need not to pay any interest or principal to the lenders till December 2018.

A email query sent to RCom remained unanswered.

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.

RCom Executive Director Gurdeep Singh is learnt to have informed employees that the company has reached a “situation where we need to call it a day on our wireless business” and this would lead to closure of “wireless business 30 days from now”.

The company will “continue to operate ILD voice, consumer voice and 4G dongle post paid services” and mobile tower business till the time they remain profitable and all the other business will be shut down, he has said.

The company has 44,000 crore of loans on its books and is finding it hard to service its dues to increased competition from Reliance Jio which is offering voice for free.

Early this month, a lifeline merger transaction between Reliance Communication and Aircel has collapsed following delay in getting approvals from the courts and other authorities like department of telecom. This also impacted its deal with Brookfield to sell its telecom towers for Rs 11,000 crore. RCom was planning to use the funds to repay its loans.

Rcom and Aircel Limited had signed binding agreements in September 2016 for the merger of RCOM’s mobile businesses with Aircel. But with the Supreme Court 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.