Reliance Jio, Upto 5,000 people may face axe

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Telecom Giant, Reliance Jio Infocomm sharply reduced the number of contracted staff, along with some permanent employees, as it strives to cut costs and improve operating margins, which fell in January-March, said people familiar with the matter.  Managers have been told to reduce team sizes. The areas that are getting impacted are administration, supply chain, finance and HR. – Economic Times

According to statement of a Jio spokesperson to economic times, “We are expanding our consumer businesses and Jio continues to be a net recruiter in the industry. We also work with contractors who may be hiring staff on fixed time contracts for our various project construction activities. Given we continue to recruit actively, the question of a cost pressure led action is not relevant”

“According to sources Reliance Jio has let go of some 5,000 people, of whom 500-600 are permanent employees and the rest are contracted. But we couldn’t independently verify.  Reliance Jio has 15,000-20,000 employees on its payroll and there is a much larger number that works for the operator but are third-party employees”

According to analysts, employee costs typically range 5-6% among telecom operators and companies working to control costs tend to drop the axe first on the workforce.

Since its entry in September 2016, Jio has upended the market with discounted rates that have helped it net nearly 307 million subscribers by March-end. The company has a revenue market share of around 31%, according to Fitch Ratings, and it generated a net profit of Rs 840 crore in the fourth quarter of FY19. In comparison, Vodafone Idea clocked losses of Rs 4,878.3 crore. Airtel has still not disclosed Q4 numbers, but the telco’s India business is expected to post losses as well.  But Jio’s aggressive pricing stance to gain customers coupled with high capex to expand 4G network has resulted in cost pressures, said experts. 

The operator’s average revenue per user (ARPU), a key performance parameter, dropped for the fifth straight quarter to Rs 126.2 from Rs 130 in the previous quarter. After the demerger of its tower and fibre operations into two units, Jio’s net debt stood at Rs 67,000 crore as on March 31, 2019. 

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