RCOM to merge three biz divisions

Reliance Communications Ltd. | Telecommunication - Service Provider | Telecom | BSE: 532712 | NSE: RCOM

05 Sep 2011 Evaluate

Reliance Communications (RCOM), India’s second-largest Telco by subscribers, is merging its three business divisions, a move that will make around 10% of its 7,000 executives redundant and also result in redeployment of another 2,000 employees to ‘field functions’. The Telco will collapse its existing business units that are carved out geographically – North, South and East – into a single entity reporting to a chief operating officer, who will be recruited from outside by the month-end.

All support functions such as customer services, IT operations, networks and products amongst others will be moved to a newly-created ‘services division’. After restructuring, around 75% of RCOM’s employees will do ‘field roles’ to drive sales execution as against 60% currently. RCOM now joins Bharti Airtel and Tata Teleservices, who recently carried out major restructuring exercises by merging business verticals and reducing employee headcount. All telcos are focusing on cost-cutting measures to boost efficiencies as they fight multiple challenges of high debt burdens, slowing growth and high marketing spends amid cut-price tariffs.

The company’s northern region head Nilanjan Mukherjee will head the newly created ‘services division’, its current head of southern operations CS Rana has opted for ‘superannuation’, while Vivek Garg , who is in charge of the east, will be assigned a new role internally. RCOM is also increasing its number of regional hubs to 12 by making Mumbai a separate unit and all hubs will now report to the new COO.