Reliance Communications (RCom) has laid off over 600 roles in an ongoing effort towards a leaner organisation, people familiar with the matter said.The country’s fourth largest telecom company is in merger talks with Aircel and MTS. Retrenchment over the last few weeks has even touched some middle and senior managers — in the Rs 30-50 lakh salary bracket, they added.
“In-country consolidation is taking place in telecom and, as is the practice globally, rationalisation of network infrastructure, sales and marketing, people and other assets will be the key drivers of greater efficiencies and synergies,” said an RCom spokesperson in an emailed statement.
Company officials asking not to be named said job cuts will help the 7,500-strong RCom integrate workforce when mergers with Aircel and MTS materialise.
When RCom announced its merger with Aircel in September 2016, the companies said cost synergies would be about Rs 20,000 crore. Costs would halve following the merger, they said. Much of this will come from job cuts since the infrastructure is already in place and it is unlikely that leasing and rental agreements will change drastically, experts said.
The RCom scrip closed at Rs 39.20, down by 2.37% on the BSE on Friday. RCom’s job cuts will not be an anomaly in an industry burdened with a debt of Rs 4.85 lakh crore and going through one of its worst phases. Price wars are forcing a spate of consolidations. Jio’s free offers for six months have forced the likes of Idea Cellular and Vodafone India to announce an alliance.
An earlier story by ET pointed out that about one-third of those working in the sector — over three lakh people, directly and indirectly — could become redundant in the next 18 months.
The rate war triggered by Jio’s entry and subsequent free voice and data offers have led to huge financial stress on incumbent telcos, including top players Bharti Airtel, Vodafone India and Idea, as well as RCom.
Financial stress forced RCom to delay its payment of around Rs 800 crore to Swedish gear maker Ericsson, said a person aware of the matter. Bulk of these dues relate to managed services delivered by Ericsson as part of the $1 billion-plus nationwide managed services contract inked in December 2014.
RCom didn’t respond to a specific query on the delay in payment to Ericsson. In response to ET’s email queries, an Ericsson India spokesperson said the company “will not be in a position to comment on the same.”
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