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Vodafone India and Idea Cellular recently merged to form India’s largest telecom company of India, Vodafone Idea, about two months behind schedule. This new union targets $10 billion synergies from both companies, with a major part being rationalisation of tower tenancies, but may have to cap its employee headcount to 15,000 levels, The Economic Times reports.
Both companies will have to lay off about 2,500 from their total staff of 17,500-18,000. Many employees may get absorbed in the parent companies of two telecoms—Aditya Birla Group and Vodafone group—others will have to be let go of.
“There will be some rationalisation, which is natural, and the company will look at reducing about 2,000-2,500 employees in the next few months,” a senior company official told the paper.
The new firm, officials told the paper, will treat employees from both merging partners — Vodafone India and Idea — equally.
The company will take care of the welfare of employees completely, with reasonable severance packages and internal transfers within parent companies, the official added.
The newly merged entity will also control promotions and incentives while it is starting out, sources told the paper. Even hikes will be skipped this year as the main motive of the company is to settle into the market and pace ahead of competition, it stated.
The company is also seeing voluntary attrition, which would naturally reduce headcount. Many operators have wound up their business, merged or shut shop as the telecom business has seen tough times, and employee exits have been on in the last two years.
A Bank of America Merrill Lynch report said integration of the two companies will be the most critical for the post-merger entity. “One is a domestic company while the other is an international one. On day 1 of the merger, the 2 tenancies of each of these sites will be accounted as 1 tenancy and 1 loading, which should result in Rs 2,000 crore savings on an annualised basis according to estimates,” it said.
As per the report, the new company has 73,000 overlapping sites, adding that the next steps of integration would involve removing the overlapping 3G/4G equipment, which would lead to power savings.
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