Shutting down 2G wireless business of Reliance Communications (RCom) will turn out a boon for other incumbent operators as most of its feature phone customers look likely to switch from the carrier.
According to analysts and industry watchers,
Reliance 2G customers may not migrate to 4G as most are feature phone users with very low monthly spending and little willingness to invest in a 4G-ready smartphone.
In fact, going by a Goldman Sachs' report, RCom's average revenue per user (Arpu) of Rs 58 per month for Q1FY18 is the lowest in the industry, over 50 per cent lower than the industry average, a signal implying most customers to be voice users.
The average Arpu of the industry stands at Rs 130-140.
Analysts say RCom adopting a 4G-focused strategy and shutting down its 2G business and asking customers to migrate to 4G may not be a feasible business as most of its users generate lowest Arpu in the industry, them being feature-phone owners.
The Anil Ambani-owned company had lost 95 per cent of its subscribers in five service areas - West Bengal, Assam, Bihar, Northeast and Odisha - in 2015 when it did not renew its 900 megahertz (MHz) spectrum (used for 2G services). RCom had 24 million active subscribers in these five areas as on September-end 2015 and by June-end 2016, they reduced to one million.
According to Telecom Regulatory Authority of India, as of July-end 2017, RCom had a total subscriber base of 81 million, of which 13 million were wireless broadband (3G plus 4G) users.
