Struggling telecom operator Reliance Communications (RCom) urged its users in Gujarat to shift from 2G to 4G technology, as the company's 2G spectrum will expire later this month. RCom sent an SMS to all its subscribers using 2G services to immediately move to 4G, otherwise, they can't use the services anymore after this month.
"We wish to inform that the company has initiated the migration of its customers in Gujarat circle to an all 4G network, prior to the expiry of 2G spectrum in that circle end September 2017," the Anil Ambani owned company told BSE Thursday.
As said earlier, RCom's 2G spectrum is set to expire later this month, which the company bought 20 years ago. Gujarat is one of the major circles for the Anil Ambani-led telco as it has over 5.4 million subscribers in the same circle, which is not at a small number by any means.
Currently, RCom is on the verge of merging with another struggling operator Aircel, but both the operators are facing a lot of challenges ahead of the merger. Both the operators already announced that the combined entity will be called as 'Aircom.'
The major intention behind this merger is to reduce the debt of the companies. At the moment, RCom is under several financial issues. The company recently revealed that its debt has extended to Rs. 45,700 crore, and is shelling out Rs. 3,600 crore as interest annually. To be precise, RCom’s debt is currently over 4.6 times its earnings, along with an EBITDA of Rs. 9,800 crore.
It would be interesting to see how RCom manages to bring down the debt to the promised Rs. 20,000 crore to lenders by December this year. On the flip side, Aircel’s debt is said to be around Rs. 18,000 crores to Rs. 20,000 crores.
However, Aircel’s debt is a reasonable one, and the company sold the 2100 MHz spectrum to Airtel for Rs. 3,000 crores recently. The combined market share will be 14.65% after the merger, even though they’re losing subscribers every month on a bigger note.
For now, AirCom will have earnings before interest, tax, depreciation and EBITDA of Rs 15,000 crore based on current trends. However, AirCom’s debt will go down because it has time to go public, even after completing the merger.
The merger is expected to complete by the end of this year and has already received approvals from NCLT, SEBI.
