M&As in telecom sector may result in shedding of jobs

According to the telecom sector pundits in the market, the consolidation in the sector will shed 1/3rd of jobs. The consolidation will result in a minimum number of telecom operators in the country and therefore adversely impact the job creation.

Mar 20, 2017 04:03 IST India Infoline News Service

Telecom
India is the world’s second largest Telecommunications market, generating myriads of jobs in the country. The sector has registered strong growth in the past decade and a half. The industry also creates thousands of jobs indirectly by the way of third party franchisee partnerships like call centres, distributors, retail stores, tower and network maintenance staff.
 
India’s telephone subscriber base has expanded at a CAGR of nearly 20%, reaching 1058.86 million during the financial year 2007 to 2016. With growing subscriber base and the high stakes data game forcing telecom players to come together, the telecom sector is speculated to witness declining as many as one million jobs.
 
As per the report released by GSM association, there are 2.2 million jobs directly provided by the Indian telecom sector while 1.8 million jobs provided indirectly by the telecom sector.
 
According to the telecom sector pundits in the market, the consolidation in the sector will shed 1/3rd of jobs. The consolidation will result in a minimum number of telecom operators in the country and therefore adversely impact the job creation.
 
Bharti Airtel is the best example to understand this perspective. The company witnessed a decline in its employee base both sequentially and annually in the quarter ended December 31, 2016. The company’s employee cost also declined sequentially and annually in December quarter.
 
The much talked about the merger in 2017, Idea Vodafone merger will lead to duplication of manpower across all levels which may result in the shedding of about 30-40% jobs.
 
Same would be the case for BSNL-MTNL merger, Airtel-Telenor merger and Reliance-Aircel merger.

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