The telecom industry, which was hoping for some revival on revenue front after Reliance Jio announced 6p/min charges, could face another round of job losses after the Supreme Court's ruling on the definition of AGR. The government's definition of telcos' adjusted gross revenue (AGR) that the Supreme Court has upheld is expected to badly hurt the telecom industry. As per the ruling, two telecom majors, Bharti Airtel, and Vodafone Idea will have to pay the Rs. 92,000 crore in tax. As the two companies have not provisioned amount in their budget for the running fiscal, the employees are staring at job losses coupled with a freeze on hiring and increments.
Discouraging signs for employees
As per a report in Financial daily, The Economic Times, the Sunil Mittal-led Bharti Airtel and Vodafone Idea are liable to pay more than Rs 80,000 crore in license fees and spectrum usage charges (SUC) within three months. Now, the industry experts are of the opinion that this would mean the two companies would be forced to cut down on costs, majorly on its staff and capital expenditure. The experts further fear that the tax would have a multiplier effect on the broader ecosystem, including equipment makers and tower vendors.
The two companies have already shown their inability to give the humongous amount of tax to the government. Earlier this week, chairman of Bharti Airtel, Sunil Mittal, has met with telecom minister Ravi Shankar Prasad and Secretary Anshu Prakash to ask for relief.
Notably, the ruling from the apex would force the industry to pay a hefty amount of Rs. 1.3 lakh crore and the development have come at a critical point when the industry is looking for a turnaround. The operator and tower businesses together are under huge debt which is mounting more than Rs. 7 lakh crore. The industry headcounts have also come down to around 180,000 from 300,000 in 2017. The industry has started hiring in data analytics, artificial intelligence (AI), internet of things (IoT) and in 5G technology but the latest development is expected to put a stop on such recruitments.
Presently, Vodafone Idea has a headcount of 10,000 employees as against 17,000 before the two entities were merged. Further, RJio has a workforce of 15,000 and Bharti Airtel has around 16,000 people on board.