The bloodbath in the Indian private telecom sector is set to worsen in 2018 which will result in 50000 more job losses, said a research report by CIEL HR Services. In 2017, an estimated 75,000 jobs were lost in the private telecom sector due to financial stress in companies.
“In this calendar year, another 50,000 jobs are likely to go (in telecom) and at this point, telecom seems to be the worst-affected sector in terms of jobs.” CEO of CIEL HR Services Aditya Narayan Mishra quoted as saying.
The telecom sector which has been facing uncertainty in terms of “profitability” due to rising competition, witnessed large-scale layoffs, said a research report. The report is based on a survey among around 100 senior and mid-level employees of 65 telco and software and hardware service providers to telecom companies.
This crisis in the Indian telecom sector began after Mukesh Ambani’s aggressive entry to the $50 billion telecom market in September 2016 with his venture Reliance Jio Infocomm Ltd. The drastically reduced data and call charges of Reliance Jio forced other telecom firms to cut the prices to sustain in the highly competitive market.
“Mukesh Ambani who is having a huge financial muscle started to give all the services for free to the customers. It was only to ensure winding up the business of the all other private service providers,” noted P Abhimanyu, national convener of BSNLEU, while speaking to Newsclick.
The aggressive strategies of Reliance Jio had a massive effect on the entire telecom industry. As the firms except Reliance Jio rework growth plans, a section of workers is being laid off. To retain the super dominant title in the industry, few telecom companies have decided to implement merger too.
“Vodafone which has gone into the loss decided to close their services in India and merge it with Idea. Except for these two big telecom companies, Tata Teleservices, Reliance info com owned by Anil Ambani, Aircel, Telenor etc. are also facing closure because of the predatory tariff rates implemented by Reliance Jio,” said Abhimanyu.
On Thursday, India's largest telecom operator Bharti Airtel reported over 39 per cent fall in its consolidated net profit for the third quarter ended December 31, 2017. The Group has also filed an application for the merger of the consumer mobile business of Tata Teleservices Limited and Tata Teleservices Maharashtra Limited with the Company.
After the launch of Reliance Jio, for the first time since the 2008-09 financial year, the annual revenue of Indian telecom companies declined to Rs 1.88 trillion in 2016-17 from Rs1.93 trillion in 2015-16 and will decline more to Rs 1.84 trillion in 2017-18, brokerage CLSA said in a report released on 7 April.
“To overcome these losses, the telecom companies are going to cut down their workforce,” Abhimanyu added. So, it will affect a section of workers in the telecom industry which directly employed around 2.2 million people.
“High costs of loan servicing, aggressive competition for market share among others have also been hindering further investment by telcos resulting in layoffs,” the report said. Salary hikes have been muted compared to other sectors and about 69 percent got annual salary hike of 7 percent, while almost one-third of them received less than 5 percent hike, the report added.
“The sector has been witnessing rough weather in terms of profitability. The high costs of loan servicing and aggressive competition for market share have reduced the profitability per subscriber. This has also impacted the software and hardware providers to the telecom operators,” the report further said.