Bharti Airtel acquisition: Loop Mobile’s employees fear job losses

 

NEW DELHI/MUMBAI: Most of Loop Mobile's 750 employees, including some 400 under contract, fear they could be left without jobs as the Mumbai-based telco agreed to sell its customers and telecom infrastructure to India's largest mobile operator Bharti Airtel in the sector's first merger and acquisition deal since 2008.

On Tuesday, Bharti Airtel said it has signed a "strategic agreement" to acquire Loop Mobile's three million subscribers and its 2G network comprising over 2,500 cell sites and optic fibre in the financial capital, subject to regulatory approvals. Together with its existing 4.3 million users, Bharti Airtel would replace Vodafone India — with 7.1 million users — as the No. 1 in Mumbai by subscribers. It would, however, continue to trail Vodafone in revenue market share — around 27% to nearly 36% — but will be a stronger No. 2 in the circle.

While the two companies didn't specify the deal value, people familiar with the matter put it at around Rs 700 crore which Loop's promoters could use to pay off theRs 370-crore debt. Analysts say Bharti would get high revenue generating customers in this lucrative market for data services. Loop's users will seamlessly move over to the Airtel network after the former's licence expires in November this year. One of the people said that the telecom department approval for the deal could take up to two months.

The broad agreement signed so far doesn't include transfer of Loop's employees to Airtel, but discussions are still on about the future of the staff which could be included in the final agreement, the people said. A top executive familiar with the contours of the deal said that employees associated with revenue streams related to transfer of customers may be incorporated into Airtel but did not disclose the numbers.

"Over the next few days whichever business streams that get transferred, teams that are involved in these streams may in all probability get transferred as well," the executive said. "Some people may be retained within Loop Mobile as the company can continue some streams of business, for instance, bulk messaging, which will require manpower but not spectrum," the executive added.

Senior managers at the company stand at a greater risk than lower level employees, said another decision maker. However fear of getting laid off is real among Loop staffers. "The fear is that most of us will be laid off," said an employee who spoke to ET.

Three of the people quoted above said that while Bharti Airtel wasn't keen to take on board a large number of employees as it already has workforce in the Mumbai circle, it could retain a few key senior functionaries, although temporarily.

Top Loop executives like CEO Sandip Basu, chief technology officer Saktidas Bandopadhay, Manivannan Venkatachalam, vice president HR, chief operating officer Surya Mahadevan "could be retained for some time for certain minimum handholding and lock in", one of the people said, but the final decision is yet to be taken. "They will receive severance of around one-year of pay on exit," he added.

Another of these executives said that though senior management has been told of the changes in workforce that will follow the merger, employees down the line haven't been formally informed as yet. "When we didn't enter the bidding, my staff knew that there was a path to be taken, so those who are at risk have something lined up; and others know their role is such that something will be worked out between the two companies," one Loop executive said.

A group of four mid-level employees who ET spoke to said had already made alternate plans, saying they would start their own venture in communications and advertising. There were some optimists too. An executive said that if Bharti is acquiring an additional three million customers, "it will need to acquire sizeable staff to service these customers." Loop Mobile didn't respond to emailed queries.

The job market for telecom specialists has been lean since 2010, and with more consolidation expected among operators, competition in the job market is likely to get intense. 2012-2013 saw over 20,000 employees in the sector lose jobs after the apex court annulled 122 permits belonging to nine telecom companies, industry insiders said.

Operationally, analysts were upbeat about the Bharti-Loop deal for Mumbai where the former just won 5 MHz of airwaves in the efficient 900 MHz bandwidth, considered ideal to offer 3G high-speed data services. Analysts at UBS said that the circle contributes 6.5% of India's total mobile market revenue with Loop Mobile (earlier knows as BPL Mobile) the oldest operator in the city. Shares in Bharti Airtel ended 1% lower atRs 302.20 on the BSE on Tuesday. PRASHANT SHARMA                                                                                           PGDM-I 

































    























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