Thousands of jobs are at stake in the telecom sector as three loss-making operators — Reliance Communications, Aircel and Tata Teleservices — face an uncertain future. Together, the three operators employ about 15,000 people.
While RCom and Aircel have called off their plans to merge their wireless businesses, Tata Teleservices is winding down some of its operations due to climbing losses. “Both Aircel and RCom had pruned their staff to make the organisation ready for the merger, for which about 2,000-3,000 employees had already been asked to leave. But, now, with the merger not happening, the entire workforce could be left in the lurch as the operators themselves figure out what to do,” said an executive of one of the telecom companies.
Shift in focus
RCom has already said that it will focus on 4G services, primarily through a spectrum-sharing arrangement with Reliance Jio. This means it will shut all operations related to its loss-making 2G and 3G operations.
Nearly all its 3,500 employees are currently working on the legacy operations. “While some may find a job in the new RCom, an asset-light strategy may not need too many people. Besides, if the lenders convert their debt in the company to equity any time, the sustainability of providing mobile services may be limited,” said an industry insider.
In the case of Aircel, it will find it find it difficult to operate in a market dominated by RJio and Airtel. “With 4G rollouts happening, only players with money power will survive. One cannot see Aircel going too far on its own,” said a telecom analyst advising the company.
While Aircel has not defaulted on loan repayment, it faces massive hurdles as its Malaysian promoters are being investigated by the CBI for a 2005 deal. “As long as the CBI case is going on, it will be difficult for regulators to approve a merger or an acquisition of Aircel assets,” said an official from the Department of Telecom .
According to some employees, the uncertainty is leading to nervousness. “Though the CEO and top executives have conveyed to us internally that it is business as usual, we are nervous as we have seen a number of our colleagues leave over the last few months,” said an RCom executive. RCom, Tata Teleservices and Aircel declined to comment.