Vodafone-Idea Merger: May lead to massive job losses, says a report

Federico Mansilla
Abril 16, 2018

"The retrenchment has to happen swiftly because in times of margin pressures in a debt-heavy industry, neither company wants to start new operations burdened with excess manpower", a senior executive aware of the development told the paper.

The merger process of Vodafone India and Idea Cellular, likely to be completed next month, could see about a fourth of the two telecom firms' combined 21,000-strong workforce lose jobs in the next few months as the companies look to save on costs, eliminate duplication and improve efficiency, reports The Economic Times citing people familiar with the matter.

According to the report, those who fall in the bottom quartile as per the performance assessment for this appraisal season will be asked to go.

Idea and Vodafone India, which have received all required clearances apart from Telecom department for the merger, have a combined debt of around Rs 1,20,000 crore.

Now, the merger has received all clearances except the telecom department and as per speculations, is expected to close sometime in May. The individual went on to say that it would be extremely tough for those getting axed to seek employment in a dented telecom industry, which has already shed one lakh employees in view of mounting losses.

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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", ET quotes Vodafone India as saying.

The Idea and Vodafone merger may result in over 5,000 employees losing their jobs.

The merged entity will have 35 per cent market share with the subscriber base of 41 crore.

But Idea and Vodafone have sold or are selling their captive towers besides trying to sell their respective 11.5- per cent and 42-per cent stakes in tower company Indus Towers to raise funds.

Despite financial pressures, the merged entity needs to keep spending top dollar to expand and deepen its 4G coverage - which is lagging both Airtel and Jio - and further set the platform to upgrade to 5G in future, highlighting the need to keep their operations lean, they said. The combined entity will be the largest mobile phone operator in India, replacing Bharti Airtel, with nearly 42 percent customer market share and 37 percent revenue market share. Vodafone also posted a $6.71-billion loss a year ago due to the poor revenue generation from its India unit.

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