Telecom consolidation in India will lead to massive layoffs: Report

By February 15th, 2017 AT 5:21 PM

The ongoing consolidation drive will lead to massive layoffs in the Indian telecom industry with as many as a third of over three lakh employees becoming redundant in the next 18 months as consolidation plays out, according to an ET report.

india-telecom-map

The Economic Times, citing various experts and executives, reported that massive job losses are inevitable as telecom operators merging operations will streamline their respective businesses to remove redundancy and cut costs. Indian telecom industry’s overall revenue is estimated at Rs 1.3 lakh crore annually, while people costs stand at Rs 34,000-35,000 crore.

“There is no doubt that staff at the head office and circle (offices) are on shaky ground, putting 10,000-25,000 jobs at risk, he said. Add those indirectly employed and the number could rise to as much as 1 lakh,” an HR head told the publication.

Currently, Reliance Communications (RCom) and Aircel are looking to merge their wireless operations to create a new merged entity. RCom is separately in the process of acquiring Sistema Shyam Teleservices to execute a three-way merger involving Aircel to create India’s fourth largest telecom operator by subscribers.

Smaller GSM telco Telenor is also looking to either merge with the RCom-Aircel combine or be acquired by Airtel, according to the report.

Separately, Kumar Mangalam Birla-owned Idea Cellular and Vodafone Plc are exploring an all-stock merger deal to counter Reliance Jio and Bharti Airtel. Vodafone Group and Aditya Birla Group have picked EY and Deloitte, respectively, for due diligence that includes a detailed look at the work structure.

Also read: RCom’s tower assets sale, merger with Aircel to take another 6-9 months to close; gets negative outlook from Moody’s

The consolidation drive is not just limited to telecom operators’ space but has taken hold of ancillary operations as well, especially towers. RCom is currently in the process of selling its tower business to Brookfield for $1.6 billion, whereas both Vodafone and Idea Cellular also said to be mulling over selling standalone operations. Bharti Infratel and Indus Towers may also see a change in control with divestment, the report said.

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