Beleaguered telecom operator Aircel is in talks with lenders and shareholders to find a way out of its current crisis with cash for operations set to run out by March.

The options being explored include a potential merger with Airtel or launching 4G operations through spectrum-sharing partnerships. The operator will look to shut down operations only if all efforts to keep operations going fail.

Sources close to the developments say the management has been told to keep the network running till a course of action is decided. “A decision will have to be taken within a month or two. Until then, the operator will continue to run the network in all circles. There is no plan to shut down as of now,” one source said.

Aircel, in which Malaysia’s Maxis Communications Bhd owns a 74 per cent stake, is weighing various options, including venturing into 4G services through partnerships. But this would require fresh investments by existing promoters.

“The question is whether the promoters should hang on for a couple of more years and hope to get better returns as the telecom market is expected to come out of the current crisis by then. If the promoters sell out now perhaps they may not get much valuation,” said a source close to the lenders.

The Airtel option The other option on the table is merge with an existing large operator. Earlier in November, Airtel Chairman Sunil Mittal told media that his company was open to acquisition talks with Aircel. “There may not be space for a standalone player without 4G spectrum so it could be better if Aircel merges with an existing player. The deal with RCom was on those lines but now that it has failed the operator will have to look at other potential partners,” the first source said.

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A company insider, speaking on condition of anonymity said that a decision has to be taken in the next two months. “There is enough cash to run operations till March. After that it will be a challenge to sustain operations for its nearly 88 million subscribers and prevent job losses of its about 5,000 employees,” the source said.

For now, executives running Aircel are focussed on trying to retain existing subscribers and improve its blended ‘average revenue per user’, which hovers at around ₹100 per month. “The operator has put on hold all spends and investments. This period till March is critical for the company,” said a source close to the joint lending forum led by SBI.

Aircel is reeling under a ₹16,000-crore debt burden and has defaulted on at least one interest payment to its lenders, according to Care Ratings, which downgraded the company’s credit rating to “default” in November.

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