Mukesh Ambani-led Reliance Jio has reportedly laid off thousands of its employees as a part of company’s cost-cut measure and to improve operating margins, which witnessed a downfall in the January-March quarter.
Jio has reduced the number of contracted employees, along with 10% of permanent staff, by 5000, said an ET report quoting sources privy to the development.
The pink slips handed to most employees are from departments including supply chain, HR, finance, administration and networks. The development has taken place also partly because of no growth in operating margins in the last two years.
Currently, Jio has around 15000- 20,000 employees on its payrolls. It also has a significant chunk of the workforce from third-party.
In the fourth quarter, Jio, despite posting a profitable quarter, witnessed average revenue per user (ARPU) going down to Rs 126.2 from Rs 131.7 in the previous quarter. The company’s EBITDA went down 5 basis points on quarter to 39%, with total expenses rising almost 8% on quarter, primarily on the back of higher network operating costs, finance expenses, and depreciation.
At the end of March, Jio mobile subscribers base stood at 306.7 million. In terms of the user base, it commands about 26% market share whereas Ambani-led firm has a revenue market share of around 31%.
According to analysts, the aggressive pricing stance offering customers data at a cheaper price range has led to impact operating margins.
However, Jio, in response to Entrackr’s queries, said that there is no cost-cut related pressure to lay off employees. It was let go of employees as part of the third-party contractual end.
UPDATE: The post has been updated with Reliance Jio response, who said it did not lay off but let go of contractual staff.