|Founded||15 July 2004|
|Fate||Bankruptcy (Mobile Network Division)|
|Anil Ambani |
|Revenue||₹40.15 billion (2019)|
|₹8.67 billion (2019)|
Number of employees
|3,038 including |
1,819 permanent employees (2018)
Reliance Communications Limited (popularly, RCOM) was an Indian mobile network provider headquartered in Navi Mumbai that offered voice and 2G and 3G data services. Rcom has closed its telecommunications business in 2019 and filed for bankruptcy.
As of March 2020, the company has reworked its strategy and continues to operate 4G data services, fixed-line communications, data center services, and enterprise solutions as well as subsea cable networks under the banner name, "Global Cloud Xchange".
Reliance Communications was founded in India on 31 July 2002 as Reliance Infocomm Limited with the introduction of its nationwide CDMA2000 service. It became Reliance Communications Limited in 2006. The company introduced its GSM service in 2008. It began using MIMO technology in 2011 to improve the quality of its 3G service, providing a data rate of up to 28 Mbit/s.
In the 2010 spectrum auction, Reliance obtained licenses for 3G spectrum in three cities at a total licensing fee of ₹ 58,642.9 million. The company reduced the price of its 3G service by 61 percent in May 2012.
Acquisition of MTS India and Digicable
On 1 July 2010, The board of Reliance Communications confirmed about the acquisition of Digicable India's largest cable network in all-stock deal. The new entity named as Reliance Digicom. Which will integrate RCOM's DTH tv, IPTV and Retail Broadband Operations with Digicable
On 14 January 2016, Reliance Communications announced that it had acquired Sistema Shyam TeleServices Limited (SSTL, operating as MTS India) in an all-stock deal. SSTL received a 10 per cent stake in Reliance Communications after repaying its existing debt. Reliance Communications would assume responsibility for instalments that MTS owed the government for spectrum purchases, amounting to ₹ 392 crore every year for 10 years. As a result of the deal, Reliance acquired MTS India's subscribers and SSTL's spectrum in the 850 MHz band.
India's antitrust regulator, the Competition Commission of India (CCI) approved the merger in February 2016. The Securities and Exchange Board of India (SEBI) also cleared the deal. SSTL shareholders approved the merger on 18 March 2016. By mid-August, it was approved by tax authorities and the shareholders and creditors of Reliance and SSTL. The merger was approved by the Rajasthan High Court on 30 September 2016 and the Bombay High Court on 7 October 2016. In April 2017, Reliance laid off 600 employees in preparation for its mergers with MTS and Aircel. The Department of Telecommunications gave the final approval for the merger on 20 October 2017. On 31 October 2017, Reliance Communications announced that the merger was complete.
Attempted merger with Aircel
On 14 September 2016, Reliance and Maxis Communications (owners of Aircel) announced that they would merge their mobile networks. The deal, the largest consolidation in Indian telecommunication history, would have created the fourth-largest mobile network operator in the country in subscribers and revenue. Reliance and Maxis would each hold a 50-percent stake in the merged entity, with equal representation on its board of directors and committees. Reliance would continue to operate in the enterprise segment and data-center businesses as a standalone company.
The company announced on 15 March 2017 that it had received approval from the SEBI, BSE, and NSE. The deal was approved by the CCI on 20 March. Aircel and Reliance shareholders approved the merger on 22 and 24 April 2017, respectively, and it was expected to be completed by mid-2017.
However, on 1 October, Reliance announced that it had allowed the merger agreement to lapse. The deal, which was expected to help the company repay ₹ 25,000 crore of debt, was cancelled due to delays by entrenched competition. Reliance was looking at other options to meet their obligations under the SDR agreement and avoid insolvency proceedings by banks. Due to the failed Aircel merger, the company announced to employees in the wireless and DTH businesses on 25 October 2017 that they would be redundant effective 30 November. On 29 December 2017, Reliance discontinued voice services in India and would provide only 4G data service.
The Ericsson case
In 2013, RCom signed a multi-year managed services agreement (MSA) with Ericsson to manage services of wireline and wireless network of 100,000 km of fiber and mobile infrastructure in 11 telecom circles in India. This arrangement was a smooth business relationship until 2016, post which RCom struggled to pay the dues. This has been seen as an impact of Reliance Jio that disrupted the Indian telecom industry with its aggressive pricing after its commercial launch in September 2016 that affected all leading telecom players.
By September 2017, Ericsson terminated the MSA and approached the NCLT to recover dues of Rs 1100 crores. By May 2018, the NCLT initiated insolvency proceedings even as RCom tried to sell spectrum and other assets. At the same time, RComm reached out to Ericsson and agreed to pay Rs 550 crore as a settlement with a personal guarantee from Anil Ambani on the condition of withdrawal of insolvency proceedings. The Supreme Court reviewed the matter in August 2018 and ordered RComm to pay up Rs 550 crore to Ericsson by 30 September. RCom failed to comply with the payment and sought an extension of 60 days to comply. Ericsson filed a contempt petition in Supreme court.
In February 2019, the Supreme court has held Anil Ambani and three others guilty of contempt of court and directed them to make payments by 19 March. In the meantime, Mukesh Ambani, the elder brother of Anil helped him with a bailout of 463 crores which he paid just a day before the deadline on 18 March.
Sale of the company's assets
During 2020, a consortium of companies is bidding upwards of $200 Million USD to buy the assets of Reliance Communications. Members of the consortium include NKV Krishna's White Lotus Group, Mukesh Ambani's Reliance Group, Bharti Airtel, UV Asset Reconstruction (UVARCL) and US-based Varde Partners.
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- [42 Mbps]
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