Vodafone-Idea merger: Combined entity may lead to layover of 5,000 employees, claims report

The combined entity of Vodafone-Idea merger may lead to a massive layoffs. According to an Economic Times report, the ongoing merger process of Vodafone India and Idea Cellular could see about a fourth of the telcos’ combined 21,000-strong workforce lose jobs in the next few months as the companies look to save on costs, eliminate duplication and improve efficiency.

The combined entity of Vodafone-Idea merger may lead to a massive layoffs. According to an Economic Times report, the ongoing merger process of Vodafone India and Idea Cellular could see about a fourth of the telcos’ combined 21,000-strong workforce lose jobs in the next few months as the companies look to save on costs, eliminate duplication and improve efficiency.

“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,” said a senior executive aware of the development.

Meanwhile, it was reported on Sunday that DoT is waiting for DIPP to give clearance for raising the foreign direct investment (FDI) limit in Idea Cellular to 100 per cent before approving the merger of Vodafone India with the Aditya Birla group firm, as per official sources.

"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," a government official told PTI.

Idea Cellular has sought to raise FDI limit in the company to 100 per cent.

The official added that the Department of Telecom (DoT) had approached the Department of Industrial Policy and Promotion (DIPP) for its remarks around two weeks back and waiting to hear from it.

"Both the companies (Idea and Vodafone) will be asked to clear their dues before merger is taken on record. DoT has not calculated the final amount...," the source said.

According to the standard operating procedure (SOP) for processing FDI proposals, all the ministries concerned are required to submit their comments within 4 weeks of the proposal. In absence of comments, it is presumed that ministries or departments have no comments to offer.

However, FDI clearance in telecom sector also requires approval from the Home Ministry which should be granted within six weeks. In case it is unable to provide its comment within six weeks, it needs to indicate time frame within which it will provide the comments.

The merged Idea-Vodafone entity will have highest subscriber base of 41 crore accounting for over 35 per cent market share and second largest spectrum holding of 1,850 megahertz in the country.