Consolidation in telecom sector could lead to job cuts

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The ongoing freebies by Reliance Jio has shaken the telecom industry and now almost all the telecom players are looking at consolidation to survive.

Consolidation in telecom sector could lead to job cuts

Incumbents telecom players like Airtel-Telenor, Vodafone- Idea, Reliance Communication-Aircel are already doing the rounds. No doubt that players will get bigger subscriber base from these mergers but this may wipe-off 10-15 percent of jobs in the sector and may be from most of the sales, distribution and infrastructure services space, reports Business Standard.

The proposed mergers are also likely to help the companies to save the manpower costs, capex and spends.

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Meanwhile, telecom sector experts think these merges are going to face lot of regulatory and operational challenges and so the full impact will not be known for some time.

"One of seven jobs in the sector is under threat. Most impacted will be jobs connected with sales and distribution and those in the infrastructure services space," said the head of an executive search firm to Business Standard.

"The job cuts are likely to play out only over the next two years. The hiring sentiment in the sector will also take a hit. The employee salaries are around 4-5 percent of the sales revenues of most big players in the sector, says the India Ratings.

According to Rajan Mathews, Director General of Cellular Operators Association of India, "We are very concerned about the financial health of the industry, which cannot sustain jobs if the sector does not grow in an orderly manner. With many companies exiting (Telenor, MTS, Videocon) the sector and country, we are looking at shedding 30 percent jobs in the near future."

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