Published: Mon, April 16, 2018
Business | By Tara Barton

Vodafone-Idea may give pink slips to 5000 employees

Vodafone-Idea may give pink slips to 5000 employees

As the companies look to save costs, eliminate duplication and improve the efficiency, the proposed merger could result in loss of job for about a fourth of the telcos' combined 21,000-strong workforce in the next few months, reports Economic Times citing sources as saying. The nodal team that is in charge of the merger process has advised the two companies to remove at least 5,000 employees in an effort to help both the companies survive a debt of almost Rs 1,20,000 crore and the revenue pressure.

The entry of Reliance Jio Infocomm, owned by India's richest man Mukesh Ambani, in 2016 caused widespread disruption through its prolonged free voice and data offers.

"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.

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

Vodafone and Idea approved their merger in May 2017 something that is expected to close by May 2018. The sole reason for taking these precautionary measures is to make the business extremely efficient after the merger.

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

Many telecom entities such as Telenor and Tata Teleservices have quit the market as they could not withstand the pricing pressure, which led to major job losses. 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.

The existing leadership teams of Idea Cellular and Vodafone India will continue to manage their separate businesses and be accountable for each company's operational performance until the merger becomes effective. "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".

Idea and Vodafone now employ roughly 11,000 and 10,000-plus people, respectively, and analysts have said that a key to the success of the combined entity is their ability to be nimble, expand networks and price their offerings competitively. The layoff process in line with analysts views who indicated that both the companies have to streamline costs in order to make the combined entity successful.

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