Idea, Vodafone may fire thousands of employees



It may be noted that presently both the companies have a combined workforce of 21,000. Both the companies are making losses, facing huge revenue pressure and have a combined debt of about INR 1,20,000 Crore. They have been advised by the nodal team handling the merger to shed at least 5,000 employees in the next couple of months.

As the merger is expected to close in May after having received almost all clearances, the report states that the companies want to cut costs before they begin new operations and do not want to be burdened with excess manpower.

Both the companies wish to start new operations without any burdens and eliminating the excessive manpower would ease the burden in times of margin pressures in a debt-heavy industry.

The debt of resultant entity is expected to be around 1.1 lakh crore as per debt situation of Idea and Vodafone India at the end of September 2017. Besides this, the profiles that have a mirror image in the two firms, including divisions such as supply chain and procurement, will also be cut down as the companies want to create a cost-efficient merged firm. The sole reason for taking these precautionary measures is to make the business extremely efficient after the merger.

Citing sources, the report said that both the companies are running into losses now due to the changed dynamics of India's telecom sector after the entry of Mukesh Ambani owned Reliance Jio.

Industry experts expressed concern about those employees who are going to get the boot.

While Idea Cellular didn't comment on the development, Vodafone India rubbished the news calling its pure speculation and untrue.

The merger is expected replace Bharti Airtel from its numero uno position which it has maintained in Indian telecom market with highest number of subscriber base at least since last one decade as per reports of the Telecom Regulatory Authority of India. "No decisions have been taken about the workforce of the merged entity, although it is fair to assume that employees will benefit from the opportunities that arise from working for a significantly larger operation", the company representative added.

Idea and Vodafone now employ roughly 11,000 and 10,000-plus people, respectively, and analysts have said that a key to the success of the combined entity is their ability to be nimble, expand networks and price their offerings competitively. The layoff process in line with analysts views who indicated that both the companies have to streamline costs in order to make the combined entity successful.