A state-run Indian telecom company is laying off 54,000 employees in an election year
- The board of the Bharat Sanchar Nigam Ltd (
BSNL) has approved slashing 54,000 jobs in order to relieve financial stress.
- The recommendations were made by a 3-member panel that was constituted in the face of mounting losses in the aftermath of Jio’s aggressive pricing.
- Other telecom operators like Vodafone Idea and Bharti Airtel have also been under pressure since Jio’s entry into the space.
The layoffs won’t happen till after the election and the officials are deferring to the new government to take up the challenge before taking the final call according to the Deccan Herald.
The three member panel consisting of Rekha Jain as the coordinator as well as Vishal Gupta and Ajay Pandey — all of whom are professors at the Indian Institute of Management - Ahmedabad (IIM-A) — was put together to find solutions as BSNL started to reel from the financial stress. And, then make their recommendations to the board.
The company’s losses started to mount after Mukesh Ambani’s Jio entered the telecom space. In the last fiscal, the company’s overall revenue fell by 20%.
BSNL isn’t the only company that has fallen victim to the aggression from Mukesh Ambani-owned enterprise. TataDoCoMo was one of the first casualties resulting in an acquisition by Bharti Airtel in 2017. Airtel was also able to acquire Tata group’s wireless phone business and Telenor for virtually nothing.
Soon after, one of the top telecom services providers in the country, Aircel blamed Jio when it filed for bankruptcy in 2018. Two of the biggest telecom players in the country, Vodafone and Idea, were also forced to merge mid-2018 to form the world’s second-largest telecom company.
The Telecom Regulatory Authority of India (TRAI) has been accused of passing regulations that are in favour of Jio that discriminate against its competitors — BSNL, Airtel, and Vodafone Idea — under the guise of being a ‘new entrant’ in the market.
One of the new regulations was shot down by the Telecom Disputes Settlement and Appellate Tribunal because it appeared to be “an unnecessary abdication of its regulatory powers by the Telecom Regulatory Authority of India”.
If a new entrant needs to be protected from the rigours of non-predation, it can be done through provisions like ‘Welcome Offer’ and ‘Promotional Offer’ as availed by Reliance Jio, but to allow freedom from requirements of non-predation till acquisition of 30% of total activity in a given market, prima facie appears an extreme step by TRAI.
In order to save costs, the board as also also approved reducing the retirement age from 60 years to 58 years, implementing the Voluntary Retirement Scheme (VRS) for all employees aged 50 years and above as well as expediting the allocation of the 4G spectrum to BSNL.
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