RCOM to move 5,500 staff off rolls
Apr 14, 2014
Source : The Times of India


MUMBAI: It's time for over 5,500 employees of the Reliance Group flagship Reliance Communications (RCOM) to bid adieu to Dhirubhai Ambani Knowledge City (DAKC). Many of them had boasted of pumping chairman Anil Ambani's hands at the DAKC, when he took over the reins of the company after the demerger of the family empire in 2005. This, Ambani had then admitted, beat the record number of handshakes he did at his wedding reception.

The billionaire industrialist has chalked out a five-pronged strategy to make the telecom elephant dance. He plans to right-size, sell global businesses, securitize Reliance Jio's receivables, cut costs and monetize real estate assets to make RCOM a leaner, profitable and eventually a debt-free company.

A detailed questionnaire sent to RCOM for a comment on these developments remained unanswered.

Right sizing

The loss-making, debt-laden firm plans to shift 5,500 of its call centre employees to a third-party BPO in a massive restructuring exercise to make the company. This comes after the company outsourced its network management services to Ericsson for north and west India and Alcatel-Lucent for east and south India, moving 9,500 employees to its partners' rolls. The company has reduced the headcount from 25,000 in 2012 to less than 10,000 now. Another 5,500 going off the company rolls will leave RCOM with less than 5,000 employees.

The company has restructured its top management by roping in Vinod Sawhny as CEO of RCOM, William (Bill) Barney as CEO of Reliance Globalcom and Wilfred Kwan as COO of Reliance Globalcom.

Globalcom sale

After multiple failed attempts in the last three years to sell its overseas submarine cable firm Flag Telecom or list it globally, RCOM has renewed its focus on offloading its overseas business. It merged three of its offshore businesses — Flag (carrier), Yipes (voice) and Vanco (enterprise) — under Reliance Globalcom, which has been restructured and rebranded as Global Cloud Exchange in the hope of fetching valuations in excess of $2 billion, or Rs 12,000 crore, sources said. The company expects the benefits of the merger to flow into the balance sheet in two quarters as valuations are likely to go up once it expands its assets.

RCOM has also divided Global Cloud Exchange into Indian and global operations so that a stake sale does not affect the flagship's balance sheet, the sources added. Reliance Globalcom had bought Flag submarine cable network in 2003 for $210 million, US-based web services provider Yipes in 2007 for $300 million and European virtual network operator Vanco in 2008 with revenues of $365 million.

Last month, the company roped in Barney and Kwan from Pacnet, giving rise to speculation among employees that Global Cloud Exchange will be eventually taken over by Pacnet.

Securitizing receivables from Reliance Jio

RCOM has signed three back-to-back deals worth Rs 17,200 crore with Mukesh Ambani-led Reliance Jio for sharing towers (Rs 12,000 crore), inter-city fibre (Rs 1,200 crore) and intra-city fibre (Rs 4,000 crore). Having already securitized Rs 1,200-crore receivables from the inter-city fibre-sharing deal, the company is now in talks with banks to securitize the remaining Rs 16,000 crore worth of receivables.

Monetizing real estate

RCOM has decided to unlock Rs 12,000 crore by spinning off real estate into an independent unit, Reliance Properties, which will be listed separately, the sources said.

Cost-cutting and smart capex

The Reliance Group flagship plans to cut network and gross acquisition costs by 10-15%. The company substantially improved its network coverage by signing inter-circle roaming pacts with other operators through a 'pay as you use' model without incurring additional capex and opex. Through the ecosystem of 10,000 sites to be shared on a bilateral basis, the company sees an additional market opportunity of Rs 10,000 crore.


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