Following are the important points in the report given by “The Economic Times” dated 29-10-2011 in the news item with the caption “India’s Telecom Story Over? Six Top Executives Of Mobile Companies Hunting For New Jobs”:
i) Industry revenues have not gone up in two years.
ii) Funds have dried up
iii) Expansion is on hold
iv) Profits and customer additions have slowed
v) The 14-player industry battles to recover from the fallout of the 2G spectrum scam.
vi) Most companies are battling high debt and stagnant revenues.
vii) Banks have refused to lend.
viii) 3G is making very slow progress.
ix) Many top executives are looking at changing sectors.
x) Instead of managing growth, expansion and rolling out new service offerings, most chief executives are confronted with reducing head count, restructuring exercises, merging verticals and businesses.
xi) Most of the companies that received their licences during the tenure of the former telecom minister A Raja have put their expansion plans on hold as they are battling high debt and also face the possibility of the Supreme Court cancelling their permits.
xii) According to data compiled by sector regulator Trai, new entrants, with the exception of Unitech Wireless are also facing an exodus of customers as operators' reduce their ultra-low tariff plans and free minutes.
xiii) Some of these operators are also awaiting an exit policy that would enable them to surrender their permits.
xiv) Over the last couple of months, several leading telcos, including Bharti Airtel, Tata Teleservices, Reliance Communications and Aircel, have undertaken major restructuring exercises while Vodafone and Idea Cellular are expected to follow suit.
Bharti Airtel's move to collapse its various business verticals is likely to trigger a large-scale job cull that will make about 2,000 executives redundant. Tata Teleservices has combined its GSM and CDMA business divisions, a move that may make about 15% of those employed by the company redundant. Last month, Reliance Communications had merged its three business divisions, forcing the company to hand out pink slips to about 700 employees and 'redeploy' another 2,000 executives to 'field functions'.
Bharti Airtel's move to collapse its various business verticals is likely to trigger a large-scale job cull that will make about 2,000 executives redundant. Tata Teleservices has combined its GSM and CDMA business divisions, a move that may make about 15% of those employed by the company redundant. Last month, Reliance Communications had merged its three business divisions, forcing the company to hand out pink slips to about 700 employees and 'redeploy' another 2,000 executives to 'field functions'.
While this report of the Economic Times covers private sector only, the situation in Public Sector is more serious. BSNL and MTNL are in losses since 2 years and the loss increase considerably. Both have proposed large scale VRS to reduce staff strength by one third. Since they have no cash reserve, they are requesting the Government to fund the expenditure for VRS. BSNL is requesting the Government to sanction Rs 11000 crore as grant or equity to make the additional payment to one lakh employees supposed to take VRS. But this Rs 11000 crores is for exgratia with 35/25 days formula and if it is 60 days formula, the amount required will be Rs 18000 crores. Government is already in financial difficulties since its revenue does not increase as per its expectation and it is not in a position even to provide required funds for MNREGA and other social sector programmes. Therefore Government is not in a position to provide the fund. As per the DPE guidelines, VRS has to be funded by loss making PSUs by taking loan from Banks. It is to be noted that the Banks are not lending to the Private Sector Companies. But they may be willing to grant loan to BSNL since it is a Government Company with large scale valuable assets. If BSNL takes such a huge amount as loan to fund VRS, it will increase its financial difficulties much more and it will threaten the future of the BSNL and its employees (in service or retired).
To help the private operators and to further destabilize the BSNL and MTNL, the Government proposed a “National Telecom Policy 2011” and released its draft on 10-10-2011 inviting comments from the public. Such a policy encouraging the greed of the private operators will not help in the healthy growth of telecom sector. Unless there is a radical change in the Policy for strengthening the Public Sector and controlling the greed of the private sector, there cannot be any meaningful growth in telecom sector.
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