Vodafone-idea merger will mean axe for at least 5000 staff

Rodiano Bonacci
Aprile 16, 2018

The ongoing merger process between Kumar Mangalam Birla-owned Idea Cellular and Vodafone India may leave thousands jobless. "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.

The nodal team taking care of the merger has reportedly advised the layoff, as the companies work on saving costs, improve efficiency and eliminate duplication.

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.

It is learnt that both the companies are making losses amid huge revenue pressure and a combined debt of around Rs 1,20,000 crore.

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.

The numbers could reportedly exceed 5000 since both companies have a lot of similar roles resulting in duplications.

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

While Idea Cellular denied commenting on the report, a Vodafone spokesperson said the news is "pure speculation" as the merger has not received final approvals.

Last month, the two sides announced the top leadership team of the merged company, Balesh Sharma as the new CEO for Vodafone-Idea India telco and Suvamoy Roy Choudhury as the HR Head of the merged business. "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. Cost efficiency will be a key element for the success of the merged entity in a brutally competitive market.

The merger has been already approved by NCLT, Sebi, and CCI and merged entity will have 410 million customers and almost 42 percent customer market share (CMS) and almost 37 percent revenue market share (RMS).

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.

The Aditya Birla Group has recently infused Rs3,250 crore into Idea, which will also raise a further Rs3,500 crore via a preferential share issue or a rights issue.

Idea Cellular and Vodafone are separately paying rental for 6,300 mobile sites which will be synced for merged entity within two years.

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