Vodafone Idea Moves To Merge Operational Circles, Job Cuts In Sight

Reeling from hefty adjusted Gross Revenue (AGR) bills, Vodafone Idea is looking to cut costs by merging weaker circles with stronger ones and giving up weaker (by revenue) spectrum markets, The ET reported. The move will entail employees losing jobs.

The company is “operationally merging” six to seven such circles already and the focus will now be on prominent markets, sources told the paper. Its latest quarterly report showed that 17 of its 22 circles have been integrated.

Moneycontrol could not independently verify the report.

The sources did not specify how many pink slips are expected but added the telecom operator was already working out severance packages.

“The sense of uncertainty has upset morale,” a senior executive told ET. Vodafone India and Idea Cellular merged in 2018 with a market cap of Rs 43,000 crore. It directly employs 11,000 people.

Vodafone Idea did not respond to ET’s queries.

The AGR battle so far

The company has – in a letter to the Department of Telecommunications (DoT), the finance ministry and the NITI Aayog – sought permission to clear its pending AGR dues in a staggered manner over 15 years after a three-year moratorium and has requested concessions on the total amount owed, media reports suggested.

The cash-strapped firm wants its AGR dues to be adjusted against its Goods & Services Tax (GST) refund demand of Rs 8,000 crore. It is said to have also requested a cut in license fees and spectrum usage charge (SUC). Vodafone Idea wants the licence fee to be lowered to 3 percent from the current 8 percent and SUC to be cut to a percent from 3 percent.

According to the DoT’s estimate, Vodafone Idea owes over Rs 53,000 crore as AGR dues, of which the company has paid Rs 3,500 crore. But, Vodafone Idea’s self-assessment pegs the amount due at Rs 23,000 crore, reports said.

Telecom companies have until March 17 to pay AGR-related dues worth Rs 1.47 lakh crore. Vodafone Idea, Bharti Airtel and Tata Teleservices have the highest pending dues. The Union Cabinet is expected to provide relief measures for the sector soon.

―Money Control