Aircel, the smallest private mobile operator in India, has warned its 5,000-plus employees to brace for “difficult” times amid “serious funding issues” in the face of intense competition.“We have had no funding for some time and have been dependent on cash generation from our current business operations,” chief executive officer Kaizad Heerjee said in an email to employees earlier this week.The Maxis-owned telco’s operations have been severely hurt by intense competition in a sector that has been a drag on the revenue and profitability of even the top operators.“As competition remains intense in a hugely financial stressed market, we too are being impacted… The company expects things to get even more difficult in coming days,” said Heerjee.He said the Aircel board has appointed Sandeep Vats, Prakash Mishra and Lakshami Subramaniam to replace directors who resigned. The board will regroup to “review and evaluate the options for the company” in the critical weeks ahead, he said.The telco is in talks with all stakeholders, including lenders, on the road ahead.Aircel is considering filing for bankruptcy in the National Company Law Tribunal, ET reported on Sunday, likely marking the demise of the last small mobile phone company and leaving only four non-state telcos, which will soon become three after a merger.“Our financial situation has resulted in network and system outages,” said Heerjee. “Millions of customers have been impacted.”The company, with 85 million customers, recently stopped services in six circles to focus on the better-performing ones.Aircel had a quarterly operating profit of Rs 120 crore in July 2016, before Reliance Jio Infocomm started services. This dropped to Rs 5 crore by July 2017 and slipped to an operating loss of Rs 120 crore in December. Idea Cellular recently snapped interconnection services with Aircel with dues of Rs 60 crore pending for three months.Aircel’s revenue was Rs 512 crore in the December quarter. The company had projected annual revenue of Rs 5,741 crore to lenders in November, or roughly Rs 1,435 crore a quarter. The annual projection had factored an intra-circle roaming agreement for 4G services with another operator, which didn’t materialise.Aircel’s situation worsened after tower vendors switched off some of its base stations for non-payment of dues, people familiar with the matter said. The company is battling a freeze on its bank accounts, which was precipitated by a Reserve Bank of India circular dubbing Aircel a non-performing asset for banks, they added.Parent company Maxis , run by Malaysia-based billionaire T Ananda Krishnan, had earlier proposed a cash infusion to support debt-laden Aircel but has pulled the plug, said one of the people. The company has been in negotiations with lenders since September but has failed to hammer out a recast of its Rs 15,500 crore debt.The decision to consider bankruptcy was precipitated after the RBI scrapped all debt revamp schemes in favour of resolution prescribed by the Insolvency & Bankruptcy Code, one of the people said. Having not made payments since September, banks can no longer restructure Aircel’s debt without provisioning for the loans.