Vodafone-Idea may give pink slips to 5000 employees

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As the mergers of telecom majors Vodafone India and Idea comes to a close, the process may see both companies laying off at least one-fourth of their workforce. They have been advised by the nodal team handling the merger to shed at least 5,000 employees in the next couple of months.

Idea and Vodafone India, which have received all required clearances apart from Telecom department for the merger, have a combined debt of around Rs 1,20,000 crore.

Both the companies wish to start new operations without any burdens and eliminating the excessive manpower would ease the burden in times of margin pressures in a debt-heavy industry.

"The numbers may exceed 5,000 since duplication will be in large numbers", said an industry expert aware of development. Idea Cellular rival Bharti Airtel was trading flat at Rs 376, down 0.5 per cent on the BSE.

While Idea Cellular denied commenting on the report, a Vodafone spokesperson said the news is "pure speculation" as the merger has not received final approvals.

The existing leadership teams of Idea Cellular and Vodafone India will continue to manage their separate businesses and be accountable for each company's operational performance until the merger becomes effective. "No decisions have been taken about the workforce of the merged entity, although it is fair to assume that employees will benefit from the opportunities that arise from working for a significantly larger operation".

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"Both the companies (Idea and Vodafone) will be asked to clear their dues before merger is taken on record".

The merged entity will have 35 per cent market share with the subscriber base of 41 crore. The combined entity will be the largest mobile phone operator in India, replacing Bharti Airtel, with nearly 42 percent customer market share and 37 percent revenue market share.

Last month, the two sides announced the top leadership team of the merged company, to be headed by Balesh Sharma as chief executive officer.

Idea and Vodafone, who have received all clearances for the merger except from the telecom department, now employ roughly 11,000 and 10,000-plus people, respectively and the merged firm could shed about a fourth of the workforce, according to a report in The Economic Times.

The Aditya Birla Group has recently infused Rs3,250 crore into Idea, which will also raise a further Rs3,500 crore via a preferential share issue or a rights issue.

Idea and Vodafone are separately paying rental for 6,300 mobile sites which will be synced for merged entity within two years.

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