Vodafone-Idea merger may lead to massive job losses, as the combined entity plan to eliminate duplication of work in order to save cost and improve efficiency. According to a report in The Economic Times report, one-fourth of the telecom employees could loss their jobs in the next few months. The telecom industry has been going through a tough phase, as margins have been reduced due to an ongoing tariff-war, after Mukesh Ambani owned Reliance Jio made a foray into the market.
“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,” said a senior executive aware of the development.
The merged entity will have 35 per cent market share with the subscriber base of 41 crore. It will also have the second largest spectrum holding of 1,850 megahertz in the country.
It has also been reported that as high as 30-40 percent of total telecom employees may not get any increment this year. Due to a fall in revenue, companies are in pressure to maintain their margins and hence contemplating ways to reduce their cost. Accordingly, bonus amount, which constitutes around 30-40 per cent of total income of senior employees, may get slashed upto 50%.
Separately, it was reported that Department of Telecom (DoT) is waiting for Department of Industrial Policy and Promotion (DIPP) to give a go-ahead for increasing the foreign direct investment (FDI) limit in Idea Cellular to 100 per cent, as per official sources. Idea Cellular has asked to raise FDI limit in the company to 100 per cent.
“Only FDI clearance for Idea is pending before merger of Vodafone (India) with it. FDI limit needs to be raised in FDI for clearing both the deals of Idea — sale of tower to ATC and Vodafone merger,” a government official told PTI.
With inputs from PTI