AIRCEL TO SWITCH OFF 6 OF 22 CIRCLES

Company to focus on 16 circles

Aircel has decided to shut operations in six telecom circles from January 31 and focus on the remaining 16 circles.

The company has licences and operates in 22 telecom circles in the country. Aircel is also looking at sharing spectrum with other mobile service providers to launch 4G services in all its circles. The decision to restructure Aircel’s business was taken by its Malaysian parent Maxis. In discussions with banks, Maxis has offered to bring in fresh equity in order to refinance Aircel’s ~ 15,000 crore debt. SURAJEET DAS GUPTA reports

Aircel has decided to shut operations in six telecom circles from January 31 and focus on the remaining 16.

The company has licences and operates in 22 telecom circles in the country. Aircel is also looking at sharing spectrum with other mobile service providers to launch 4G services in all its circles. The decision to restructure Aircel’s business was taken by its Malaysian parent Maxis. In discussions with banks, Maxis has offered to bring in fresh equity in order to refinance Aircel’s ~15,000 crore debt.

Aircel has divided its circles into two categories. For four of the circles — Delhi, Mumbai, Karnataka and Andhra Pradesh — it plans to up its market share in the areas in which it operates from 2-4 per cent to 10 per cent through the launch of 4G services.

In the remaining 12 circles which include Tamil Nadu, Assam, the North-east, Jammu and Kashmir, Kolkata, Orissa, Uttar Pradesh East, Rajasthan, Punjab and West Bengal, among others, it already has 10 per cent share in the operational areas in most places which is a viable business.

The plan ends months of speculation that Aircel had decided to shut shop or sell its business after a merger with Reliance Communications failed to materialise. The telecom company has over 88 million customers, with a market share of 7.49 per cent, though it has been losing market share.

Aircel has for a few years been scaling down operations in the Gujarat, Haryana, Madhya Pradesh, rest of Maharashtra, Kerala and Himachal Pradesh circles. It has now decided to stop operations in these circles, where it has around 2 million customers. The circles do not generate more than 3 per cent of Aircel’s total revenue.

In the 12 circles Aircel’s market shares is around 2-5 per cent primarily because of low coverage. But it has reasonably good market share in areas where it provides services within these circles.

For instance, Aircel covers 30 per cent of Rajasthan but it is the number three player in Jaipur. In Kanpur and Lucknow, Aircel has a comfortable 10 per cent share of the city markets, even though its coverage in Uttar Pradesh East is merely 35 per cent.

Sources close to Aircel said the company’s decision to continue as a niche player was based on the premise that nearly one-third of India’s 1.2 billion telecom subscriber market was voice-only. Another third uses some data and the rest is data-led, where the big players are concentrating.

“Aircel will position itself in the first two markets as it has 3G spectrum for the next 18 months though this market will shrink. That is why it is looking at entering 4G though shared spectrum,” a source said.

Aircel will play on tariffs and packs (like sachets) for subscribers who cannot spend the tariff commitments on Reliance Jio, Airtel and VodafoneIdea Cellular. The company is concentrating on the sub-~100 ARPU customer, by offering him more value.