Fri. Mar 29th, 2024
Anil Ambani reliance

Anil Ambani led Reliance Communications is all set to shut down its 2G and 3G services in the coming weeks. In an email sent to the employees last month, the company had confirmed the development. Also, in a recent media interaction, Punit Garg, Executive-director of Reliance Communications stated that post shutting down operations, the company might also function as a mobile virtual network operator.

According to Fitch, one of the prominent rating agencies, RCom is expected to close down its 2G and 3G businesses in the coming weeks and gradually, it will shift its focus on offering 4G services as a virtual network operator. This step is being considered by the company after looking at the growing competition in the sector and falling revenues.

A mobile virtual network operator (MVNO) does not have its own licence and it buys data and voice call minutes in bulk from other network providers. The services are then sold under their brand and using the network of the partner which supplies the services. This is like a reseller business agreement and RCom might partner with Aircel or Reliance Jio for the same.

RCom also owns spectrum in 800Mhz, 900Mhz and 1800Mhz range and it is planning to share the same with other telecom operators to monetize. It has already signed an agreement with Mukesh Ambani led Reliance Jio, according to which, RCom is helping Jio reach to the areas where the cables cannot be distributed.

Reliance Communications is currently indebted by ₹45,000 Crores. The company has suggested a “zero write off” alternative to the lenders, according to which, the banks can take over the management and initiate sale of spectrum and assets owned by RCom. According to analysis, the banks can convert ₹7000 worth of loan to equity, ₹17,200 crores can be raised by selling the assets, including towers and spectrum and another ₹10,000 crores by selling real estate owned by the company. Experts believe that the lenders, headed by country’s largest bank, State Bank of India, will take over the management by end of this year.

By Prithviraj Singh Chauhan

Part time journalist, full-time observer. Editor-in-Chief at The Indian Wire. I cover updates related to business and startups.