November 15th, 2017
Over 75,000 employees from the telecom sector lost their job in the last one year and 30,000 to 40,000 more job loss is anticipated. The reason behind such a major shift can be attributed to the introduction of Reliance Jio in the telecom sector which resulted in prioritisation of data and accelerated the consolidation(merger) of operators, tower firms and vendors.
The competition in the market is one of the many reasons for the loss of 75,000 jobs, a report by the Economic Times said.
Teleanalysis said that the merger of Vodafone with Idea will result in almost 10,000 employees losing their jobs. India’s telecom giant, Bharti Airtel, is in the process of acquiring Tata Teleservices.
Sistema, Telenor, Videocon already shut shop. Severe competition in the market made it a five company industry, where smaller companies faded slowly.
Jobs in India
India’s unemployment rate has been an issue of rising concern. A more or less healthy growth rate has stopped being accompanied by a proportionately healthy job creation rate.
In its annual household survey conducted by Labour Bureau, it is found that the country’s unemployment rate has risen up to a five-year high of 5% in 2015-16. Joblessness is gripping the Indian economy with each passing year.
The Labour Bureau had earlier measured unemployment stood at 4.9% in 2013-14, 4.7% in 2012-13 and 3.8% in 2011-12. Presently, according to the Labour Bureau, under-employment is at a staggering 35%.
India’s usually neglected aspect of unemployment crisis is of concealed unemployment and under-employment – not finding work for a full year and working at very low wages. The Labour Bureau’s report on unemployment paints a dire picture of both fronts.
RBI issued warning
In April, the Reserve Bank of India (RBI) warned commercial banks about loans issued to the companies in the Telecom sector. “The telecom sector is reporting stressed financial conditions, and presently interest coverage ratio for the sector is less than one,” the note from the RBI read.
In July, experts warned that the sector was looking at a loss of 40,000 to 50,000 employees soon. Reacting to the warning, Telecom Minister Manoj Sinha assured that the situation was otherwise and Reliance Jio itself will create jobs.
Future of the telecom sector
As operators try to keep up with Jio by offering lucrative data and calling pack, it resulted in the selling off of tower assets. After the Vodafone and Idea merger materialises, they plan to sell off their telecom tower assets to American Tower Corporation for $1.2 billion.The debt-laden Reliance Communications also is reportedly reworking its tower business sale. The company might shut its 2G services from December 1.