Dark Days for Telecom Ahead- What to Expect?
Media companies could be next in line as telecom operators make a kill to control content offerings as well. This is just the start of a paradigm shift in India’s telecom industry.
India’s telecom industry is in poor shape and the storm could result in job cuts in hundreds and thousands. Several telecom sector companies are merging to beat competition and cut cost. A few are even shutting down operations because of financial losses. According to industry experts opinion, there can be around 100,000 layoffs in the telecom sector over a couple of years.
For example, Videocon Telecom closed its operations in Punjab circle this year and asked 3 million customers to switch to other operators to ensure continued services. This means curtains for the Videocon mobile services in the country. According to media reports, Videocon took the decision after incurring huge losses and was not keen on investing further in the business.
The merger of Kumar Mangalam Birla’s Idea Cellular and Vodafone (India) too will have implications for the industry and the staff. The merger may see 10,000 employees losing jobs in the next year.
This is logical: a big merger, by its very definition, seeks to consolidate processes and remove redundancies, resulting into thousands of jobs getting redundant due to duplication of positions.
An Economic Times report says, quoting industry experts and executives, that huge job cuts will result and will be inevitable after telecom operators go for mergers in order to streamline business and cut costs.
“There is no doubt that staff at the head office and circle (offices) are on shaky ground, putting 10,000-25,000 jobs at risk. Add those indirectly employed and the number could rise to as much as 1 lakh,” says an HR consultant.
Similarly, Reliance Communications (RCom) and Aircel are merging wireless operations in order to create a brand new entity. RCom is also acquiring Sistema Shyam Teleservices to get a three-way merger going involving Aircel.
India’s telecom sector is under a lot of pressure and future growth will depend on how well organizations are able to streamline processes and retain bottomlines. Right now, it is a battle to survive. This in no way is the end of mergers and consolidation. Media companies could be next in line as telecom operators make a kill to control content offerings as well. This is just the start of a paradigm shift in India’s telecom industry.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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