Shiva Bhalla

Shiva Bhalla

Nearly 1.5 lakh jobs at risk due to financial strain on telcos

October 5, 2017

Mumbai: Despite continuous efforts by the government and regulatory body to firewall telecom sector against any future stress, industry estimates have stated that nearly 1.5 lakh direct and indirect jobs in the sector face danger of corporate downsizing.

At present, the sector is burdened with astronomical debt — to the tune of nearly Rs 8 lakh crore by some estimates — and heavy losses due to a slew of freebies which are being doled out by incumbent telecom players to retain their customer base.

The grim reality that the sector faces can be gauged by the comments made by Communications Minister Manoj Sinha at the recently held India Mobile Congress: “The government is aware of the stress in the sector… earlier also we have intervened, and if needed we will do so again.”

“We will make sure that the sector does not die,” said the minister.

In April, the Reserve Bank of India (RBI) had asked banks to review immediately exposure to the telecom sector, which has a debt of Rs 4.6 lakh crore, and make higher provisions to firewall their business against any future stress.

On the RBI notification, industry body COAI said the government should address the issue of financial plight of the telecom sector with “utmost urgency” and make a renewed push for lower levies as mooted by the telecom regulator.

According to industry observers, telecom companies have no option left but to initiate “severe cost-cutting” measures — including downsizing — to sustain operations.

Facing the axe are between 20,000-25,000 direct jobs, many of which will be due to planned mergers between incumbent players. Mergers alone will lead to over 15,000 job losses as existing portfolios and profiles are duplicated.

As per industry sources, major player Idea Cellular has axed around 1,800 jobs in the lead-up to its planned merger with Vodafone. A further reduction of 5,000-6,000 employees is on the cards as and when the merger fructifies, perhaps next March.

On the other hand, Vodafone has laid-off 1,400 people from its side as part of the merger plans with Idea.

Telecom major Bharti Airtel axed 1,500 people — predominantly from the sales and retail teams. Duplication of jobs that came with the Telenor buyout also resulted in job losses.

Reliance Communications has also laid off some 1,200 people over the last year in the lead-up to the merger with Sistema and its now-called-off merger with Aircel, which, too, is learnt to have let go of 800 employees.

However, industry estimates place a far larger number of around 125,000 indirect jobs that will be wiped out due to the turbulence being faced by the sector.

Besides the sector, the Union government, which has come under criticism from various quarters for slow economic growth and lower-than-expected job creation, will also find it hard to provide substantial alternative opportunities to the unemployed.

Till some time back, the sector was amongst the top five largest employment opportunity generators in the country. It supported direct employment of over 20 lakh in the country during 2015-16.

Incidentally, India, with over 1.16 billion mobile users is the second largest telecom market in the world, after China. But telecom operators have time and again lamented that they are facing pressure on income and profitability on account of competition intensified by the entry of Reliance Jio—owned by Mukesh Ambani.