Both companies — which are making losses amid huge revenue pressure and acombined debt of some Rs 1,20,000 crore —have been advised by the nodal team handling the merger to shed at least 5,000 employees in the next couple of months.
“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 merger, which has received all clearances except from the telecom department, is expected to close sometime in May. Sources have told ET that those who fall into the bottom quartile in the performance assessment during this appraisal season will be asked to go and profiles that have a mirror image in the two firms, including divisions such as supply chain and procurement, will also face the axe as the telcos want to create a costefficient merged firm without any flab.
“The numbers may exceed 5,000 since duplication will be in large numbers,” said an industry expert aware of development. It will be tough for those getting the axe to find jobs within a vastly shrunk telecom industry that has already let go of at least one lakh employees. While Aditya Birla Group, which owns Idea Cellular, declined to comment, the diversified conglomerate with operations across cement, retail, textiles and financial services among others has in the past accommodated some of its retrenched employees in other group companies.
Responding to queries from ET, a Vodafone spokesperson said, “This is pure speculation and totally 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.”
Idea and Vodafone currently 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. Cost efficiency will be a key element for the success of the merged entity in a brutally competitive market.
Keep Reading This Article