Who Is Responsible For Reliance Communication Current Situation


Just like a fairy tale story once upon a time…. in 2004 -2005 era Reliance communication was the darling of every user in India. Wow, then what happened; Reliance communications business came to younger son of Respectable DB Ambani and he changed the track of the company direction. Reliance was instrumental in bringing devices to common hand and thought that once user will get habitual like alcohol then start charging end user. As a smart user, once user stopped getting the free talk time they moved to other service provider without closing the existing connection. That led to detoriation of HLR vs. VLR active user % and also impacted the ARPU.

It is really interesting to observe that Reliance communications selected CDMA just opposite of majority of other player and in turn lack of fashionable devices and it also helped competitor to snatch the remaining user base. The growth rate of Reliance Communication landed at the lower end as they invested in domain like undersea cable to data center where the business is capex intensive but global downturn as well as offering of better value proposition based cloud based solution blocked Reliance Communications path to prosperity.
In most recent quarterly report, the user Base came down to 102 mn andARPU is one of the lowest among peers. They claim to have 34 million plus data user Base and generating one of the lowest again.

In order to reestablish itself, they merged with MTS brand ownerwhere Reliance communications will still hold 90%, on the other side they are talking with Aircel another Indian service provider reeling under huge debt plus failed to attract high ARPU userbase.

I am following Reliance communications for the last 3.5 yearand every year they come up with one or another punch line that they are going to sell their tower business and they are in discussions  including exclusive discussion  but unfortunately the tiered investor all the time keep on waiting.

Six months back they announced that they are on the verge and equity price got the bump upwards and now they are saying that it will be done post Aircel deal. How they can claim that it will be done post Aircel deal when Aircel deal discussion just got extended.

In my point of view, that equity investor will not buy the point that what is your EBITA and concern regarding serving of debt but they actually want them to see tower and other non profitable business to reduce the interest cost and in turn increase the earning per share.
The current state of Reliance Communications foundation happened on the day they started giving subsidized device with Reliance communications connection.
Now they are doing another mistake of forcing more than 6 mn to port to their new network otherwise they are disconnecting the service. I am sure it is not going to help them as well as take them anywhere.

It's a strategy of Reliance communications to stream line the business and then get acquired or merged with Reliance Jio. We should not forget that how Reliance Jio entered into it indirectly.

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Visionary Leader with 22 years of multi-functional experience - combine astute tactical, strategic, business, technology and industry skills in ICT domain at domestic and international level (Wired/Wireless/ networks /platforms/ connected device) .... More

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