According to the latest news reports by a news publication, Reliance Communications is shutting down a majority of its wireless business over the course of November. The ET report adds that the employees of the organisation have been notified that 30th November will be their last day of work.
The move has been in the making for a while, and the development clearly refers to the ‘creative destruction’ brought in by the new entrant Reliance Jio.
Gurdeep Singh, executive director of Reliance Telecom, reportedly said to employees yesterday, “We stand at a situation where we need to call it a day on our wireless business and this would bring the curtains down on our wireless business 30 days from now. And as a result, we tried whatever means to sustain and put oxygen in the business but we will not be able to sustain the business beyond 30 days from now.”
While the report is based on an audio recording that ET hasn’t been able to verify, the development is most likely to be true. Furthermore, Singh also adds that besides ILD voice, consumer voice and 4G dongle post-paid will be migrated, everything else will be shut down and that the DTH license for the company expiring on 21st November will not be renewed. The tower business, which is bringing business, is expected to remain operational; although there are talks about a stake sale to Canada’s Brookfield, the report says.
Among the many factors being held responsible for the move, the major ones that Gurdeep listed were giving up CDMA business, prolonged merger with Sistema Shyam Teleservices, stalled merger with Aircel and the ‘creative destruction’ that Reliance Jio unleashed on the industry and adversely impacted many players. He has been clearly heard saying in the audio clip that November 30th will be the last working day at the organisation. If the news is confirmed, thousands of employees have about a month to look for a new job in a tumultuous sector.
Under a debt of nearly Rs. 47,000 crores, the move is in alignment with the strategic restructuring program which is underway in the Anil Ambani led organisation. The news comes on the heels of Tata Teleservices working on helping its employees exit before its impending closure. One can expect more announcements from the telecom sector in the coming times, as it works overtime on disruptions, slowing growth and technological upgrading.