The anticipated crisis in the debt-laden, fiercely competitive Indian telecom sector has started manifesting in the form of job losses, after the biggest consolidation move about a fortnight ago.
A media report has said that Anil Ambani-controlled Reliance Communications (RCom) has laid off about 800 employees and is unable to honour payment commitments to vendors.
Some of the retrenched employees include senior executives, the Moneycontrol reported on Friday.
RCom's annual report for FY2016 had said that the company had 9,115 employees across various businesses as of March 31, 2016.
For the third quarter ended December 2016, RCom has posted loss of Rs 531 crore on total revenues of Rs 4,922 crore. Its cumulative debt was Rs 42,700 crore.
In a consolidation mode marked by the merger of Aditya Birla Group's Idea Cellular with British telecom firm Vodafone's India operations and acquisitions by the largest operator Bharti Airtel, the sector is widely expected to trim costs by restructuring that will inevitably lead to job losses.
Competition has also intensified in the sector, mainly because of Mukesh Ambani's Reliance Jio's aggressive foray last December.
The aggressive bidding for spectrum by the operators over the past few rounds has led to debt burden rising sharply. A report by ratings agency Icra pegged the debt for the telecom sector at Rs 4.50 lakh crore at the end of FY2017, up from an already-high of Rs 4.10 lakh crore.
The Idea Cellular-Vodafone merger, likely to be completed by December 2018, will catapult the merged entity to the number one spot, both in terms of subscribers and revenues.
As of December 31, 2016, Idea Cellular had 192 million subscribers, while Bharti Airtel had 265.85 million and Vodafone India 204.7 million subscribers. Another operator, Aircel, had 91 million subscribers at the end of calendar year 2016. RCom had about 85 million customers.
