Both companies want to cut costs, improve efficiency before they begin new operations and do not want to be burdened with excess manpower.

Idea-Vodafone India merger could lead to over 5000 layoffs
news Telecom Monday, April 16, 2018 - 11:18

As the mergers of telecom majors Vodafone India and Idea comes to a close, the process may see both companies laying off at least one-fourth of their workforce.  Both companies together employee about 21,000 employees, of which at least 5000 are expected to lose their jobs in the next few months, reports Economic Times.

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.

As the merger is expected to close in May after having received nearly 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.

ET reports that during the appraisal season, those who fall into the bottom quartile when it comes to performance will be laid off. In addition, roles that are exactly the same in both firms in divisions such as supply chain, procurement, etc, will also be asked to go.

The numbers could reportedly exceed 5000 since both companies have a lot of similar roles resulting in duplications. Making matters worse is the state of the telecom industry in the country, where most companies are facing losses. In such a situation, those losing jobs will find it tough to find jobs elsewhere.

While Idea Cellular didn’t comment on the development, Vodafone India rubbished the news calling its pure speculation and untrue. “The two companies have not received final merger approvals and so the leadership teams of Vodafone and Idea continue to compete in the market and manage their businesses separately. 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.

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. Once merged, the combined entity will be the largest telecom operator in India with almost 42% customer market share and 37% revenue market share. Bharti Airtel is currently the largest in the country.

The telecom industry has been under immense pressure ever since Reliance Jio entered the market with extremely low data costs. Incumbents have began registering losses and some layers such as Aircel have filed for bankruptcy.

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