RCom is quitting the mobile biz! Or at least the 2G part!

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ITEM: A news report claims Reliance Communications (RCom) is reportedly planning to scrap the majority of its wireless business by the end of next month. In this case, the “majority” appears to mean mainly its 2G business, which accounts for almost two-thirds of its subscriber base.

ET Telecom reported that Gurdeep Singh, executive director of Reliance Telecom, told employees that thanks largely to Reliance Jio taking a wrecking ball to the Indian mobile market with free voice and data plans, “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.”

Singh said that RCom will migrate its ILD voice, consumer voice and postpaid 4G dongle businesses to its enterprise division, provided they remain profitable. Everything else will be shut down:

“All of us need to move on. 30th November is our last working day,” said Singh, who has been with the telco for the last six years.

The quotes are from an audio recording of a company town hall meeting on Tuesday obtained by ET Telecom.

RCom hasn’t commented directly on the recording, but it did issue a statement Wednesday confirming a announcement earlier this month that it will shift gears on its mobile strategy to focus on 4G services:

“As already announced on 1 October 2017, RCOM has decided to adopt a 4G-focussed strategy for profitable growth of its wireless business. Accordingly, RCOM will be optimizing its 2G and 3G footprint, and related infrastructure and human resources, with effect from 30 November 2017″ […]

“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.”

According to the Business Standard, RCom’s plan is to shut down its 2G business completely and migrate its 81 million 2G customers to 4G:

According to a company official, 60 per cent of its customers are still using the outdated 2G technology, which is not viable to service with technology upgrade adopted by all players. The company had earlier adopted a similar strategy in other parts of India to churn out low-value customers. 

In other words, the Rumored Big Shutdown is apparently just RCom ditching its 2G service – something plenty of other operators have done ages ago, albeit not in India.

That said, operators in other markets that have dropped 2G did so when 2G users comprised a tiny fraction of their subscriber base. To do it when 60% of your user base still uses 2G is a fairly big deal.

It’s unclear to what extent Rcom will try to keep its 2G subs – it’s arguably cheaper to ditch them and focus on getting its higher-paying 3G subs to switch to 4G. But as cellcos like Globe Telecom can tell you, convincing even 3G subscribers to switch to 4G isn’t as easy as it sounds.

Meanwhile, RCom did confirm on Wednesday that it will shut down its DTH satellite TV business, Reliance Digital TV, on November 18 when its DTH license expires, ET Telecom reports:

A company spokesperson said it was working with other operators for migration of its customers. “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.

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