For the last 6 months, there is
buzz in the market place that Reliance Communications and Aircel is joining
hand to fight with big players as well as face Reliance Jio Onslaught
collectively. Both the organization is reeling under huge debt and constantly
losing market share. The fund constraints also put them in tight spot to
innovate new products in order to
differentiate themselves.
As per the industry news, both
the organization will own 50% each and company will have thousands of Crores of
loans on their books. If the merger goes through then there will be major
realignment will happen in both the organization and biggest loser will be
employees of both the organization.
On the market competition side,
both the organization is very confident that they will be better placed to ward
off any competition including Reliance Jio and will gain market share. They are
also claiming that their revenue market share will grow from the current level
of around 12%.
In my point of view, Reliance
Communications failed to increase their wireless business for the last 3 to 4
years with stagnated revenue but their debt level went beyond their control.
Reliance Communications is also well known for their poor customer care.
Most of the partner working with
Reliance Communications also face issues in integration due to legacy network
and innovation is completely missing. The recent move by Reliance
Communications to force millions of user to port on to 4G dented their image.
If the merger goes through then
there will be distraction within management level of both the organizations as
both the parties will be busy in realignment of business, product line,
regulatory etc and that will open an opportunity of window for incumbent
operators like Airtel, Vodafone and Ideacellular .
Reliance and Aircel on collective
basis is having more than 60 million data user as well as around 7 to 8
Millions of prepaid userbase.
I also would like to point out
that many user still remember the very poor service offered by Reliance when
Mr.Mukesh Ambani launched telecom service with number of complaint on billing
side and that is the reason that i have not considered Reliance Jio in the
race.
All of us are talking about
Reliance Jio impact on Airtel or Vodafone or IdeaCellular but missed to
identify the opportunity lying in front of them. Read More
