Idea-Vodafone Merger Will Put 5000 Employees Out Of Jobs!

Strategically speaking, the merger between Idea and Vodafone is a brilliant decision to handle Jio’s onslaught.

However, in terms of job creation, this is proving to be a major disaster.

Reports are coming in, which states that 5000 jobs can be terminated, as a result of this merger. What are the reasons for this massive job loss? And which type of jobs will be culled?

We will soon share the details.

Meanwhile, it seems that a major FDI related rule can prove to be a roadblock for this merger between Vodafone and Idea!

5000 Jobs To Be Lost After Idea-Vodafone Merger

Idea and Vodafone have a combined workforce of 21,000 employees: Idea has 11,000 employees and Vodafone has 10,000 employees.

Once they merge, around 25% of the combined workforce or 5000 jobs shall become redundant, and this means bloodbath in the job sector.

5000 employees can be asked to quit their respective jobs, very soon.

There are basically two types of jobs will be asked to go:

1. The employees who score low in the performance benchmarks this year will be the first to be asked to leave.
2. Jobs which will become redundant will get the axe. Both the companies have departments such as supply chain, procurement, sales, etc. Once the merger happens, these jobs will go away. Either employees from Vodafone will be retained, or from Idea – but not from both the companies.

Vodafone has vehemently denied these reports, as a 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.”

Experts state that Vodafone and Idea have a combined debt of Rs 1.2 lakh crore, and job cuts are now necessary for the survival of the combined entity.

An unnamed senior executive said,

“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,”

Can A FDI Rule Become A Roadblock?

Meanwhile, Department of Telecom has said that they are still waiting for an FDI clearance for Idea before they give the final approval for this merger.

Once the FDI clearance arrives, FDI in Idea can be raised to 100%, which will allow Vodafone to invest in the new company.

A senior official said,

“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”.

DoT has already approached Department of Industrial Policy and Promotion (DIPP) on this issue two weeks back, and their remarks are still awaited.

Once the merger happens, the combined entity of Idea and Vodafone will have 41 crore subscribers, becoming India’s largest telecom player with 35% share and 2nd largest spectrum holder with 1,850 megahertz of spectrum.

We will keep you updated, as new details emerge.