Dream that came true but failed to last

By:
Harsh Vardhan Sehgal
Vinay Kumar Sharma
Shikha Sharma
Background and Objectives
• Background - Reliance Communications entered the Indian Cellular business in 2002.
Company achieved many milestones in the timespan of 15 years of operation, but had to
shut down the wireless business in 2017 reeling under debt of around Rs. 46,000 crore.
• Objectives of the project: To identify Root cause for the downfall of Reliance
Communications
• Identify and understand success and failure of
• Strategy
• Technology
• Business Model
• Mergers and Acquisitions
• Impact of environmental factors
• Management/Execution failures
Methodology
• Analysis of data from below sources:
TRAI reports
Research papers publicly available from JM Morgan and other consultancy
firms.
Various press releases
Interactions with Reliance Communications former senior executives
Balance sheet of company (Publicly Available)
Personal experience of authors working with the company
Earning Call Details available in Public Domain
Findings
• Technology
• CDMA vs GSM ( Multiple Technologies required different handling so no focus on single technology)
• Handset Ecosystem not managed
• No offer from RCom to GSM subscribers for handset
• CDMA technology not upgraded and rural sites shut down and kept live in only Metros.
• GSM Sites not well planned and if planned delayed expansion
• Network expansion impacted
• Lack of response to market due to centralization
• Holes in GSM Network
• LUT sites switched off
• Sharing of Capex with other Tower Companies not done
• Huge investment in 3G but no return
• Business Model
• Post change in top management there was Strategic Shift
• Extracting more and more out of existing assets instead of leveraging it for further growth
• Confused Business Model --Trading Mindset…No Long-term Vision
• No Focus on CDMA inspite of providing 60% revenue
• GSM not sizeable but still getting focus (whatever focus was there)
• Management Focus to save Opex instead of generating revenue-

• Unlocking the value

• Share @750-No divestment
• Creation of separate Tower sharing company not done
• Loss of Market Value
• Loss of Business Focus
• Failure of merger and acquisition attempts
Findings
• Sales & Marketing
• Product Competitive
• Good quality customer didn’t come because of erratic GSM network-High utilization less
ARPU resulting in higher Opex and negative EBITDA.
• Channel Partners Commission structure reduced
• Sales Team-
• Recruited in Town only---No Rural Focus
• Multiple customer and Channel Handling
• Channel Issues not sorted and accounts not reconciled
• Customer Care
• Unprofessional and untrained
• Dissatisfied Customer taking advantage of less cost calls
• Human Resource
• Good quality people left
• No leadership
Findings
• Management Focus to save Opex instead of generating revenue
• Channel Partners Commission structure reduced
• Non Payment of vendors
• Emergence of Rjio-Last Nail in the Coffin
• Voice Calls Free
• High speed data
• Govt. support
• 9 Months free launch