News Karnataka
Sunday, February 25 2024

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

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Mumbai: Nearly 150,000 direct and indirect jobs in India’s debt-ridden and loss-making telecom sector face “clear and present danger” of corporate downsizing, as per industry estimates.

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 also cautioned commercial banks about loans given to companies in the telecom sector.

“The telecom sector is reporting stressed financial conditions, and presently interest coverage ratio for the sector is less than one,” the RBI note had said.

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.

“In the larger scheme of things, with the economy slowing down and most industry sectors seeing flat or negative growth, the impact is going to be ‘telling and bloody’, with jobs not being created across sectors, and re-employment becoming a tough task,” an industry analyst told IANS.

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.

“As per some estimates, the mobile industry in India currently contributes 6.5 per cent ($140 billion) to the country’s GDP, and employs over four million people (direct and indirect),” said the Annual Report 2016-17 of the Department of Telecommunications.

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