Aircel is laying off a part of its 8,000 employee workforce as the company inches closer to merging its wireless business with Anil Ambani-owned telco Reliance Communications. The development was first reported by ET, and the report claimed that around 700 employees were handed out pink slips. A spokesperson from Aircel confirmed the layoffs with MediaNama but denied that there were 700 employees being sent away. “They (layoffs) were a small fraction of what was reported by ET…there is a certain kind of business realignment happening,” the spokesperson added.
“The referred news report is speculative and misleading. We would like to emphasize that amidst all that is happening in the sector, our focus is to build a profitable company, keeping the best interest of our customers and people,” Aircel said in a statement.
The ET report added that employees were given a week’s notice along with a severance package which includes basic pay for the next six months. The downsizing of workforce is being carried out to remove duplicate human resources once the company merges its operations with RCOM, the report said quoting an unnamed source.
Aircel is not the only company that is hit by rising competition in the telecom industry. Post launch of Reliance Jio, smaller operators are either looking for an exit or phasing out operations. In this month Telenor was reportedly in discussions with RCOM for merging its business unit and spectrum holding with the Aircel-RCOM merged entity. It was also in talks with Airtel for a possible $350 million merger deal. Idea Cellular, on the other hand, was in talks with Vodafone Group for a potential merger deal.
Merger deal will cut 40% of RCOM’s debt
Note that the Aircel-RCOM deal is worth Rs 65,000 crore ($9.7 billion) wherein the shareholders of RCOM and Aircel will look to create a merged entity with both companies holding a 50% stake each. Speaking on the merger deal, RCOM’s CEO Gurdeep Singh said during a recent analyst call that RCOM’s overall debt will be reduced by Rs 20,000 crores once the deal is finalized. “That is nearly 40% of its total debt. We have applied for the stock exchanges and CCI approvals to be followed by filing of the scheme in NCLT (special court for corporate cases),” added Singh.
Note that RCOM is also in process of acquiring regulatory approvals for merging the MTS brand under it. The $690 million deal was announced in April last year and once it goes through, RCOM will look to integrate MTS operations including the customer with it, while MTS will hold a 10% equity stake in RCOM.