In a bid to stop losses, debt-laden Reliance Communications (RCom) is pulling the plug on its 2G services.
The company will shut down all 2G mobile operations by November 30. This will lead to about 1,500 job losses, according to industry sources. Subscribers will be given the option to either shift to its 3G/4G network or port out to another operator.
Separately, RCom has also decided to close down its direct-to-home (DTH) services, operating under the brand Reliance Digital TV, with effect from November 18.
RCom will upgrade all its 2G customers, totalling over 40 million, to 3G and 4G services depending on their preferences and handsets they own. The company has cited cutthroat competition in the sector, especially with a new entrant coming in with “creative destruction”, sources close to the development said.
RCom has nearly 2,500 employees, of which 1,200-1,400 are working on 2G. It is believed a large number of these will be asked to go, another source said.
Officially, the company said the decision is based on plans to adopt a 4G-focused strategy.
“As already announced on October 1, 2017, RCom has decided to adopt a 4G-focussed 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 November 30, 2017,” RCom said in a statement.
“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.”
Long-term perspective Amresh Nandan, Research Director at Gartner, said: “This move by RCom seems to be based on a longer term perspective of spectrum utilisation and economic efficiency of running multiple networks. Shutting down of 2G is happening in many parts of the world.”
DTH shutdown With its DTH licence expiring, RCom is also effectively shutting down Reliance Digital TV. The company had attempted unsuccessfully to merge its DTH operations with the Sun Group in 2013.
“DTH operations are a non-core area for RCom, and we are currently working with three leading DTH operators for seamless migration of our customers, for them to enjoy uninterrupted services,” said RCom in its statement. “A new scheme without any additional costs will be communicated to our customers in the next few days.”
On Wednesday, RCom shares closed down 3.24 per cent at 16.45 on a strong BSE, which ended 1.33 per cent up.