Reliance Communications to 'call it a day' on its 2G mobile business; cut several jobs next month

Reliance Communications has decided to pull the brakes on its 2G mobile business within a month and show the door to several of its employees. Now, subscribers on 2G-network of the Anil Ambani-led telecom operator can either upgrade to 3G or 4G network or switch to a different operator.

Reliance Communications will continue its 3G and 4G services till the time they remain profitable, industry sources told PTI. Employees of the debt-ridden telco have reportedly been told by RCom Executive Director Gurdeep Singh that the company has reached a "situation where we need to call it a day on our wireless business" and this means closing down the "wireless business 30 days from now".

Reports indicate that Singh also talked about closing down company's DTH business once its license expires on November 21. 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.

Reliance Communications was also looking for a buyer to take its DTH business off its hands. RCom shares tanked 5 per cent on the back of compnay's decision to close its DTH business. No comment on these matters has been received from Reliance Communications yet.

The decision to can the 2G network comes on the heels of RCom's failure to close the merger deal with Aircel earlier this month. Burdened with a debt of around Rs 46,000 crore, the merger was expected to help lowering the debt. Back in September last year, RCom and Aircel had inked a binding agreement to merge their mobile businesses. But, on Sunday, RCom announced that the agreement had lapsed owing to legal and regulatory uncertainties, objections by interested parties and delays in receiving relevant approvals.

While Aircel was one of the several possible transactions that Ambani was pushing for to reduce RCom's debt, the company said on Sunday that it will consider an alternate plan to cut debt, which includes sharing and trading of its spectrum or airwaves valued at about Rs 19,000 crore.

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. The new spectrum will also allow RCom to accommodate existing users upgrading from 2G network to 4G.