3. Vodafone Idea Limited
Business Pan-India integrated GSM operator
Services- 2G, 4G, 4G+, VoLTE and VoWiFi
HQ- Mumbai & Gandhi Nagar
CHAIRMAN- Kumar Mangalam Birla
CEO- Ravinder Takkar
Indian position 3rd largest in India
Global position 6th largest in the world
4. Vodafone India
1992= MAX TOUCH=MAX + HUTCHISON WHAMPOA
2000= ORANGE= HUTCHISON + ESSAR
2005= HUTCH=HUTCHISON ESSAR+ BPL
2007= VODAFONE
5. Idea Cellular Limited
1995= BIRLA COMMUNICATIONS LTD
1996= BIRLA AT&T
1997= BATATA
2002= IDEA
2004= IDEA+ ESSCOTEL
7. WHY COMPANIES RESTRUCTURE ?
Companies have to be consumer-centric if they want to succeed.
If consumer behaviour evolve, companies need to adjust their organisations to
address these changes.
Following and creating consumer trends through periodic adjustment can be
considered as a non-financial reason for reorganisation.
In fact, if restructuring is part of a company’s strategy, it will have a direct impact
on long-term financial results.
8. REASONS FOR RESTRUCTURE- Internal Reasons
•Stagnant or decreasing revenues
•Too low gross margin
•Too high operating costs
•Bad cash flow
•Over- investment
•Under-investment
•High labour costs
•Unclear roles & responsibilities
•Poor internal communication
•Lack of leadership
•Bad design of processes
•Marketing budgets allocated ineffectively
9. REASONS FOR RESTRUCTURE- External Reasons
•New consumer trends
•Innovations that redefine the market
•Company’s market share decrease due to actions of competition
10. Reasons for Vi Merger
High bargaining power till entry of Jio’s free/ cheap 4G data in 2016
Subscriber base to be the highest in the industry at 400 million
Largest Merged Entity
Distribution channel
Service infrastructure
Cost synergy
Capex synergy
Debt structure
11. Reasons for Vi Merger
Hard to Pay Salary to employees
AGR ruling
Too BIG To FAIL
Diminishing Customers due to BAD Service
Small ARPU
15. Type of merger
Horizontal merger: Two firms operating in same industry or
producing ideal products combining together. Main objectives
are to benefit from economies of scale, reduce competition,
achieve monopoly status and control the market.
Joint venture: Two companies form a temporary partnership
(consortium) for a specified purpose.
Concentric merger: Combination of two firms which are
related to each other in terms of customer groups, functions or
technology.
17. Conclusion
The merger will make Vi a leading player.
With management synergies arise benefits INR 670bn for cost and capital
expenditure and 140bn operating expenses by the 4th year.
Bring debt with sale of Tower Assets in the combined entity.
The merger aids cost saving and asset monetisation opportunities.
Aditya group consolidated with Vodafone to tackle price war
Have rights to equalise the stake in stages.
Shareholders hope they will be benefited with the merger in the long term.
18. Challenges are increasing day by day
Recently airtel band width is sold to jio
Number of users are leaving Vi due to lack of good service
