The telecom industry may see more job cuts and freeze on hiring and increments as the operators will have to pay about Rs 92,000 crore to the Centre after the Supreme Court's court on adjusted gross revenue (AGR), according to a report by The Economic Times.
The apex court on October 24 upheld the definition of AGR formulated by the Department of Telecom (DoT), allowing the Centre to recover Rs 92,000 crore from telecom companies. Thus, the telecom companies will have to pay the amount in less than three months. This would force the telecom companies to slash costs, especially on staff and capital expenditure, according to recruiters and industry executives.
“The telecom sector, which is now basic infrastructure, is in for a very rude shock as investments in capex will drop dramatically and headcount restructuring will become the order,” Navnit Singh, chairman and managing director of India for executive search and advisory company Korn Ferry International told the newspaper.
Bonuses and salary increases for FY21 seem unlikely as another hiring freeze is expected, Aditya Narayan Mishra, director of CIEL HR Services, told the newspaper.
The government may soon send out demands for dues to telecom companies, as per the report.
Since the apex court's order, telecom operators have been trying to see if the financial blow can be softened. Sunil Mittal, Chairman of Bharti Airtel, is sadi to have met telecom minister Ravi Shankar Prasad and secretary Anshu Prakash on Monday to press for some relief.
“The operators will now have to look at ways to ensure the future viability of their company which includes investments in network rollout, technology upgrades, expansion plans and manpower costs,” Rajan Mathews, director-general of lobby group Cellular Operators Association of India (COAI) told the newspaper.
The move may hurt two telecom operators - Vodafone Idea and Bharti Airtel - more as both are currently running in losses. Vodafone Idea and Bharti Airtel may have to cough up dues of Rs 39,000 crore and over Rs 41,000 crore, respectively.