Reliance Communicatiaons, India’s fifth largest telecom operator, according to revenues, is clearly feeling the heat of increasing competition and falling ARPUs in the wireless telecom space. As part of major company overhauling, the mobile operator has asked about 10 percent of its total employee base – or around 700 mid-level employees to leave, while it has shifted top-level management to other departments. One of the well-known figures to be moved is Mahesh Prasad, president, Wireless Business, who is likely to be given the portfolio of Reliance Entertainment. While the restructuring is likely to be completed within the next 15 days, the company will pay two months stipend across the board, according to reports.
While the restructuring is part of a merger of the telco’s three businesses in the North, South and East, under a single COO who is to be hired by the month end, the move is likely to see RCom’s wireless EBITDA margins rising by 2-3 percent. This is by far the largest exodus of employees that the telecom operator has seen, beating even the bad recession phase.
While this move to restructure the company is similar to other organizations that have recently fired mid-level employees on a large scale and hired top global managers to handle a single, merged entity, including India’s number one telco – Bharti Airtel, which recently merged its enterprise, DTH and wireless business, the move comes as a bit of a surprise, especially after RCom recently hired two new executives to head its enterprise division at Reliance Globalcom, as well as making strategic appointments to its wireless team.
The telco also recently raised its prepaid tariffs by 20 percent in an effort to increase ARPUs, and for the first time succeeded in making a marginal profit in ARPU numbers in the last quarter. On the data front, CDMA high speed data coverage has expanded from 65 to 518 towns in the last 6 months and 3G services are being provided in 330 towns already. RCOM also offers 1X data in CDMA in over 20,000 towns.
However, RCom, which is aiming to reach 200 million mobile subscribers, said recently that it was open to acquisitions of new service providers in the Indian market. The telco is also looking to sell off its tower business, Reliance Infratel for $5 billion, and has hired UBS to look for potential investors.
Reliance Communications’ net profits declined to Rs 1,346 crore ($302 million) in the last quarter from Rs 4,655 crore ($1,031 million).
By Beryl M