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RCOM has laid off employees, delayed IUC payments to telcos: report

Anil Ambani-led Reliance Communications has laid off close to 800 employees in the last few weeks, including employees from senior roles, according to this MoneyControl report.  The report also said that the company has defaulted in paying interconnect charges to telcos including Airtel and Vodafone and to other unnamed vendors. MediaNama has written to RCOM seeking more details, but they did not respond at the time of publishing.

Note that Aircel had confirmed with MediaNama in February that it is laying off a part of its workforce, as it inches closer to merging its wireless business with RCOM.

Reports of layoffs at RCOM comes at a time when the telecom industry has turned fiercely competitive, especially after the launch of Reliance Jio. Jio’s freebies have hurt rival telco’s revenues, causing them to lose subscribers as well. This has led to a major shift in the industry: telcos are now focusing on generating more ARPU and retaining high-value customers, as opposed to the earlier tariff-led strategy.

Looking for a discreet exit, smaller player like Telenor and MTS, have struck merger deals with bigger players like Airtel and RCOM, respectively. Videocon has also shut down its operation partially. Note that MTS’s merger deal with RCOM is yet to be approved by DoT. The third largest telco, Idea is now merging with the second largest telco Vodafone to take on Jio, while Airtel is betting on 4G and fiber Internet services to take on Jio, which is a 4G-only operator in 22 circles.

RCOM had shut down CDMA operations

Note that RCOM had lost close to 3.1 million mobile Internet subscribers during the quarter ended December 2016 (Q3-FY17)—the time when Jio was offering free calls and data. In Q2, it lost another 3.8 million users, as the company started switching of CDMA and forced users to migrate to 4G. The company’s suffered a net loss of Rs 531 crore during Q3FY17, compared to a profit of Rs 38.8 crore in the preceding quarter. The company said that the decline in profits was due to RCOM’s CDMA shutdown as it migrates to become a 4G-only operator.

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Apart from this, RCOM has also signed two different deal, primarily to cut debt, which stood at Rs 42,071 crore at the end of June 2016:
-In December, RCOM sealed a deal with asset management company Brookfield to sell its pan-India tower assets for a reported value of Rs 11,000 crore, which will be used to cut debt..
-RCOM’s wireless business merger deal with Aircel, allows RCOM to reduce its debt by Rs 20,000 crore.

 

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