The financial issues of Vodafone Idea (Vi) are not hidden from anyone. But now, when Financial Express (FE) took a closer look at the employee churn rate of the company, it is pretty evident that there's a problem there as well. The telco has been losing subscribers every month and quarter. According to the latest TRAI (Telecom Regulatory Authority of India) report for August 2022, Vi lost 1.9 million users during the month. As per the FE report, the employee count for Vi has dropped by over 35% in the last four financial years. In FY19, Vi had over 13,520 permanent employees, while at the end of March 31, 2022, the figure had dropped to 8,760. Note that the higher employee count in FY19 was also due to the fact that Vodafone and Idea had merged operations.
Employee Cost Reduced Because of Lesser Employees
It is direct math. The lesser the number of employees, the lesser the cost to keep them. FE report says that the consolidated employee costs, which include allowances and salaries, fell by over 24% to Rs 1,735 crore in FY22 from Rs 2,294 crore in FY19. The lower cost of keeping the employees would definitely be a small relief for the telco, which is struggling to keep its finances in place.
In its annual report for FY22, Vi said that the employee benefit expenses decreased by Rs 294.9 crore from Rs 2030 crore for the year ended March 31, 2021, to Rs 1735 crore for the year ended March 31, 2022.
Vi would need to generate some positive cash flows to keep the business going and add more employees to scale operations further. The telco is trying to raise funds via external investors at the moment. If something clicks, then it would be a positive update for the company. Vi's board is scheduled to meet on October 21, 2022, for a discussion of fundraising via debt.