Vodafone, Idea may let go of over 5000 employees

Vodafone, Idea may let go of over 5000 employees

Vodafone, Idea may let go of over 5000 employees

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. "The retrenchment has to happen swiftly because, in times of margin pressures in a debt-heavy industry, both companies do not want to start new operations burdened with excess manpower", the senior official told ET.

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.

As per details, both companies are making heavy losses now, and there is major pressure on the revenue front, which combined with an accumulated debt of approximately Rs 1,20,000 crore.

The merger, which has received all clearances except from the Department of Telecommunications, is expected to close sometime in May.

"The numbers may exceed 5,000 since duplication will be in large numbers", said an industry expert aware of development.

"Only FDI clearance for Idea is pending before a merger of Vodafone (India) with it. FDI limit needs to be raised in FDI for clearing both the deals of Idea - sale of a tower to ATC and Vodafone merger", report quoted sources.

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

The Vodafone-Idea Cellular merger is yet to receive clearance from telecom department, which is expected to come in next month.

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

Another shock for the industry, as the merger between India's second and third telecom service provider (Vodafone- Idea Cellular) may lead to massive job losses, ET reported. "For that, one needs to have higher cost efficiency, and manpower will be the first to go", said Sanjiv Bhasin, the executive vice-president for markets and corporate affairs at brokerage IIFL.

The combined entity will be the largest mobile phone operator in India - replacing Bharti Airtel - with nearly 42% customer market share and 37% revenue market share. Vodafone also posted a $6.71-billion loss past year due to the poor revenue generation from its India unit.

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