Aircel, the Modbile Operator services have filed for Bankruptcy because of mounting losses. Billionaire T Ananda Krishnan who owns the company, suggested that the reason for this action was necessary because of furious competition in the telecom sector and “disruptive entry of a new player”. The request for bankruptcy was filed on Wednesday, at the National Company Law Tribunal (NCLT). The statement that has been issued by the company says, “This has caused significant negative business and reputational impact on the company.” And it also said that the filing of Bankruptcy had been decided for a variety of factors, that included, intense competition, increased losses and a high level of unsustainable stress. “Post-detailed discussions with the financial lenders and shareholders, the company could not reach consensus with respect to restructuring of its debt and funding.”
This could have been an effect of Reliances’ introduction of Jio internet, which was introduced by the company in 2016, and which promised free internet for over six months and then reduced rates. It caused a frenzy in the market, and forced the smaller businesses to either shut down or look for other options as many people chose the free internet services over any kind of prices.
Another difficulty for the company might be that the distributors will have now difficulty in selling lakhs of SIMs as people are unlikely to buy them now after hearing the news of the bankruptcy. There’s still anticipation of a course of action that could lead them out of this rut, but its yet to be announced.