India’s cash-strapped telecom operator Vodafone Idea has reportedly has laid off 1500 permanent employees across the country across various functions to cut operational costs. The development also follows the telco’s move to operationally consolidate its telecom circles from 22 to 10.
Vodafone Idea had 20,000 employees at the time of the merger in 2018. The number came down to 11,705 permanent employees before the organizational rejig to reduce the number of circles in May this year.
The telco, which is currently involved in the AGR dues case, informed India’s Supreme Court that it does not have money to pay its employees’ salaries, and sought a 15-year timeframe to clear dues.
“For many junior and mid-level employees, Vodafone Idea is giving severance pays based on years of work with the company,” an employee, who lost his job, was quoted as saying by the publication.
Due to its financial situation, Vodafone Idea’s telecom equipment partners like Nokia, Ericsson, Huawei, and ZTE have started delaying taking new orders for 4G equipment, fearing they may not be able to recover payments.
In the absence of new gear to expand the network and add capacity, the telco’s network integration plan has taken a hit. It was previously aiming to merger Vodafone and Idea Cellular networks by March 31, 2020.
According to a report by the Economic Times, European vendors like Nokia and Huawei are now asking for bank guarantees against new orders, while Chinese vendors Huawei and ZTE have also stopped taking new orders for 4G equipment.
European vendors had letters of credit from banks against previous orders, while Chinese vendors had deferred payment terms with the telecom operator.
As per industry estimates, cited by the publication, Vodafone Idea owes the vendors Rs3,500 crore to Rs4,000 crore ($470 million- $540 million) cumulatively.
The report said that Vodafone Idea needs 4G RAN, massive Mimo along with core products to build capacity and coverage in the country.
The situation with vendors will further deteriorate the network experience which has already resulted in a sharp fall in its user base. Vodafone Idea has lost 117 million users since its merger was announced in August 2018.
The telco recently informed the country’s Supreme Court that no bank was willing to provide any guarantees for AGR-related payments to the Department of Telecommunications (DoT). The telco’s debt stood at Rs112,520 crore ($15.21 billion) at March-end. It still owes over Rs50,000 crore ($6.76 billion) to the DoT in adjusted gross revenue (AGR) dues.