5000 staff to be sacked? Idea Cellular share price slips over Vodafone merger lay-offs report
Idea Cellular and Vodafone have been advised by the nodal team handling the merger to lay off at least 5,000 employees in the next couple of months. The incumbent telecom companies are making losses amid huge revenue pressure and a combined debt of some Rs 1,20,000 crore, the report claimed.
Idea Cellular share price dipped marginally even as a news report claimed that as many as 5,000 of 21,000 employees may be sacked by Vodafone-Idea Cellular merged entity. The telecom giants may take this step to cut cost and ensure work is not duplicated. The lay-offs may happen during summer months. The stock of Idea slipped as much as 2 per cent to Rs 70.75 on the BSE. Idea Cellular rival Bharti Airtel was trading flat at Rs 376, down 0.5 per cent on the BSE.
The entire telecom industry witnessed a disruption after Reliance Jio, backed by Mukesh Ambani-owned Reliance Industries, joined the already-saturated telecom market with its unlimited free voice calls and data offers. This led to a sharp and sustained fall in telecom stocks with Idea Cellular losing 17 per cent in last one year. By comparison, Sensex rallied 16 per cent during the same period.
A report in ET claimed that Idea Cellular and Vodafone have been advised by the nodal team handling the merger to lay off at least 5,000 employees in the next couple of months. The incumbent telecom companies are making losses amid huge revenue pressure and a combined debt of some Rs 1,20,000 crore.
The Vodafone-Idea Cellular merger is yet to receive clearance from telecom department, which is expected to come in next month.
However, a Vodafone spokesperson told ET, the news is pure speculation and totally untrue.
Meanwhile, the merged Vodafone-Idea Cellular entity will have highest subscriber base of 41 crore accounting for over 35 per cent market share. It will also have second largest spectrum holding of 1,850 megahertz in the country.
The merger is expected replace Bharti Airtel from its numero uno position in the telecom space. Bharti Airtel maintained its top position in the market with highest number of subscriber base at least since last one decade as per reports of the Telecom Regulatory Authority of India (TRAI).
The debt of combined Vodafone-Idea entity is expected to be around 1.1 lakh crore as per debt situation of both telecom firms at the end of September 2017. The amalgamation will result in capex synergies, since it will eliminate the duplication of spectrum capacity and infrastructure related requirements.
Idea Cellular and Vodafone are separately paying rental for 6,300 mobile sites which will be synced for merged entity within two years.