It's really encouraging that Indian Telecom service provider sector is witnessing consolidation. Post liberalisation of rules and regulations around spectrum trading, we have seen series of spectrum buyouts. It offered companies like Aircel, Videocon, and RCOM to monetize their assets and helped them reduce debt level.
Reeling under stiff
competition and near stagnation in revenue and profitability coupled with
problems in servicing debt forced small players to join hand.
Reliance communications and
Aircel agreed to merge their wireless business with equal partnership and their
clear intention is give tough time to established players to Reliance Jio.
They also offloaded their
debt and transferred it in new entity. Many analysts said that Reliance
communications reduced their debt level by 20k Cr but fact is different.
Reliance communications will have the same debt level on consolidated basis.
Both the companies are also
scouting for additional $1 bn investment so that they start improving
their network as well as sharpen their innovation to be in the game with
more than 190 MN subscribers Base.
In my point of view,
consolidation in the sector was necessary to ensure that limited player gets
the timing power but the entry of Reliance Jio spoiled the scenario completely.
It is also expected that
post Reliance jio commercial service offering starting 1st Jan 2017, industry
will get back to a situation of pricing power.
At that point, real game to
retain or snatch the premium customer will start.
As per the press release by
Reliance communications that merger will take another two quarter and it is
really good for both the organization as they will realign their caper and
opex.
While everyone talked about
the benefit of merger but no one talked about the employees attached with both
the organization. It's a done deal that there will be major layoffs
in Finance, legal, sales, operation, products and other. Most of the
employees will be on their toes as they don't know about their future.
Isn't it so easy to say that
we look for profitability and suitability but no one think about employees
who put their heart and soul to make the company.
If reader think that my
point of view is correct and went through the similar situation than please
share with your friends.For a country like India where there is no social
security or government support in case someone loses their job, it's a tough
situation to be in.
Completely agree with your points.
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