MUMBAI: Aircel plans to halt services in six circles that are dragging its profitability down and will surrender its 2G spectrum to the government in these service areas, people familiar with the matter said, adding that the debtladen telco is also in talks with potential buyers for a sellout.
For now, shutting operations in UP (West), Haryana, Gujarat, Madhya Pradesh, Maharashtra and Himachal Pradesh – where it is offering 2G services to some four million users with network-sharing pacts with Tata Teleservices and Reliance Communications – will help the operator, majority owned by Malaysia’s Maxis, boost operating profit to over Rs 1,200 crore per annum, the people said.
Aircel’s move would likely give the telco, struggling with a debt of about Rs 15,500 crore, the ability to last out the forced consolidation in the sector that has driven Tata Teleservices and Telenor to sell out to Bharti Airtel for practically free and Reliance Communications (RCom) to shut wireless services. Aircel has some 5,000 employees, out of which a small proportion is employed in those six circles.
Aircel will shortly inform the regulator and its subscribers of its decision to withdraw from these areas while continuing to provide services in circles like UP(East), Tamil Nadu, Kerala, Kolkata, Rajasthan, North East, Jammu & Kashmir, the people said, adding the operator plans to return administered spectrum, or ones which wasn’t auctioned, to the government.
Aircel declined comment. “The company’s focus now is to ride out the wave of low rates for 18-24 months,” said a person familiar with the company’s plans. The mobile service operator hopes to retain its customers based in its strongholds even as its monthly average revenue per person has fallen below Rs 100. Prior to Jio’s launch last year, Aircel’s average revenue was Rs 130-140 per customer each month. With 89 million subscribers, Aircel had to rush into plan B after its merger with Anil Ambani-led RCom was called off in September. Acknowledging that Aircel was probably hasty to sell its 4G airwaves, the person quoted earlier said a telecom operator without a data service had little future.
Yet, with a third of the user base still consuming less than 2GB of data and another third not yet using data, Aircel still has opportunity in the lower end of the market where voice services dominate, the person added.
Currently, Aircel is the only remaining small operator in the industry, after RCom shut down its wireless segment and Telenor and Tata Teleservices set to exit their mobile businesses. An Aircel executive said the telco was in talks with all major players for a possible sale as well. In a recent interview to ET, Sunil Mittal, chairman of Bharti Airtel, had said the market leader would be interested in the company.