The document discusses mergers and acquisitions in the telecom industry. It provides details about the merger between Vodafone India and Idea, two major telecom companies in India. Vodafone is a large multinational telecom company headquartered in London, with mobile operations in 26 countries. Idea is the third largest wireless operator in India, headquartered in Mumbai. The document then discusses some of the top mergers and acquisitions that have occurred in the telecom industry.

1. MERGER AND REASONS
FOR TAKING MERGERS
BY
AMRITHA A NAIR

2. WHAT IS MERGER
• A merger is a transaction that result in the transfer of ownership and control of a
corporation
• Arrangement where by two or more existing companies of approximately similar
size combine into one company.
• Two companies usually agree to merge when they feel that they can do something
together that they can do one their own.
• Shareholders of the transferor company receive shares in the merged company in
exchange for the shares held by them in the transferor company as per the agreed
exchange ratio.

3. EXAMPLES
• Rajasthan bank and ICICI bank
• Renault and Nissan
• Arcelor Mittal

4. A merger can take place in following ways:
• By purchasing assets
• By purchasing of common shares
• By exchanging of shares for assets
• By exchanging of shares for shares

5. ADVANTAGES
• Does not require cash
• Accomplishment tax-free for both parties
• Merger of a privately held company into a publicly held company allows the
target company shareholders to receive a public company’s stock.

6. Disadvantages
• Diseconomies of scale if business become too large , which leads to higher
unit costs.
• Clashes of culture between different types of businesses can occur reducing
the effectiveness of the integration.
• May need to make some workers redundant , especially at management
levels- this may have an effort on motivation.

7. Reasons for merger
• Industry consolidation
• Improve competitive position
• Defensive move
• Synergies
• Market/Business/Product Line Issues
• Acquire resources and skills

8. Reasons for
merger
Expansion
of
businessGoodwill
Increase in
market share
Mutual
benefits

9. Importance of merges
• Greater value generation : mergers generally succeeding generating cost
efficiency through the implementation of economies of scale .
• Gaining cost efficiency: when two companies come together , the joint
company benefits in terms of cost efficiency. As the two firms foam a new
bigger company , the production is done on much larger scale .

10. • Increase in market shares: an increase in market share is one
of the plausible benefits of mergers.
• Gain higher competitiveness: the new firm is usually more
cost- efficient and competitive as compared to its financially
weak parent organisation.

11. Impact of mergers
*
•employees
*
•customers
*
•Investment community

12. Merits and demerits
of merger
By
Amlu Selvy

13. Merits of merger
 Economies of scale
 Tax benefits
 Financial resources
 Entry in global markets
 Growth and expansion
 Helps to face competition
 Increase in market share
 Increases in goodwill
 Research and development

14. Demerits of merger
 Big size and scale
 Customer services
 Lack of human approach
 Valuation problems
 Dysynergy effect
 Failure to integrate well
 Long incubation period

15. ACQUISITION AND
FEATURES

16. An acquisition is the purchase of all or a portion of a
corporate asset or target company.
An acquisition is a corporate action in which a
company buys most, if not all, of another firm's
ownership stakes to assume control of it. An
acquisition occurs when a buying company obtains
more than 50% ownership in a target company.

17. As part of the exchange, the acquiring company
often purchases the target company's stock and
other assets, which allows the acquiring company
to make decisions regarding the newly acquired
assets without the approval of the target
company’s shareholders.
Acquisitions can be paid for in cash, in the acquiring
company's stock or a combination of both.

18. FEATURES
•BUYING ONE ORGANIZATION BY ANOTHER ORGANIZATION
•IT CAN BE FREINDLYTAKEOVEROR HOSTILETAKEOVER
•ACQUISITION IS LESS EXPENSIVETHAN MERGER
•BUYERS CANNOT RAISETHIER ENOUGH CAPITAL
•IT IS FASTERAND EASIERTRANSACTION
•THE ACQUIRER DOESNOT EXPERIENCETHE DILUTION OF OWNERSHIP

19. IMPACT OF MERGERS AND
ACQUISITIONS
Presented by
Anjaly Joy

20. • Employees
Mergers and Acquisitions impact the employees or the workers the most .
It is a well known fact that whenever there is a merger or an acquisition,
there are bound to be lay offs.
• Impact of mergers and acquisitions on top level management
Impact of mergers and acquisitions on top level management may actually
involve a “clash of the egos”. There might be variations in the cultures of the
two organizations.

21. • Shareholders of the acquired firm
The shareholders of the acquired company benefits the most. The reason being, it
is seen in majority of the cases that the acquiring company usually pays a little excess
than it what should.Unless a man lives in a house he has recently bought,he will not
be able to know its drawbacks.
• Shareholders of the acquiring firm
Hey are most affected.If we measure the benefits enjoyed by the shareholders of
the acquired company in degrees ,the degree to which they were benefited,by the
same degree , these shareholders are harmed .

22. BENEFITS OF MERGERS AND ACQUISITIONS
• Greater value generation
Mergers and acquisitions generally succeed in generating cost efficiency through the
implementation of economies of scale .It is expected that the shareholder value of a firm
after mergers or acquisitions.
• Gaining cost efficiency
When two companies come together by merger or acquisition,the joint company benefits
in terms of coat efficiency. As the two forms forms a new and bigger company,the production
is done on a much larger scale .

23. Increase in market share
An increase in market share is one of the plausible benefits of merger and
acquisitions.
Gain higher competitiveness
The new form is usually more cost efficient and competitive as compared to its
financially weak paret organization.

24. MERITS
DEMERITS
ACQUISITION
By,
Anjana Priya N J

25. ACQUISITION
• It is a corporate action in which a company buys most, if not all, of
another firms ownership stakes to assume control of it. An acquisition
occurs when a buying company obtains more than 50% ownership in
a target company. As part of the exchange, the acquiring company
often purchases the target company’s stock and other assets, which
allows the acquiring company to make decisions regarding the newly
acquired assets without the approval of the target company’s
shareholders. Acquisitions can be paid for in cash, in the acquiring
company’s stock or a combination of both.

26. MERITS
 SPEED :
• Acquisition is one of the most time efficient strategies. It
offers the opportunity to quickly acquire resources and core
competencies not currently held by your company. Risks and
cost of new product development decrease.
 MARKET POWER:
• It can build market presence for your company ,increasing market
share while reducing the competition’s stronghold. Growth
through acquisition can reduce competitor capacity and level the
playing field.

27. New resources and competencies:
Business may choose acquisition as a route for gaining resources and
competencies currently not held. These can have multiple advantages
ranging from immediate increases in revenues to improving long term
financial outlook to making it easier to raise capital for other growth
strategies.
Meeting stakeholder expectations:
In some cases, stakeholders may have expectations of growth through
acquisition. While not all stakeholders will insist on acquisition as a growth
strategy, under nearly all circumstances, stakeholders are looking for
returns on any investments or other advantages for non-investing
stakeholders.
Financial gain:
Acquiring organizations with low share value or low price earning ratio can
bring short term gains due to assets stripping.
Reduced entry barriers:
We can often overcome formally challenging market entry barriers while
reducing the risks of adverse competitive reactions.

28. DEMERITS
 Financial fallout:
Returns may not benefit stakeholders to the extent anticipated ant the
expected cost savings may never materialize or may take far too much time to
materialize due to a number of developing factors higher than anticipated
price of acquisition, an unusually long time for acquisition process ,etc.
Hefty costs:
Under some circumstances, the cost of acquisition can climb steeply, well
beyond earlier projections.
Integration Issues:
Integration of acquired organizations can bring a number of challenges.
Company cultural clash can erupt and activities of the old organizations may
not mesh as well as anticipated when forming the newly combined entity.

29. Unrelated diversification:
When an acquisition brings together diverse products or service lines,
there can be difficulties in managing resources and competencies.
Management of employees and departments can face extreme hurdles.
Distraction from operations:
When the acquisition faces too many challenges or the timeline for completion
stretches out longer than anticipated, too much of the managerial focus is diverted
away from internal development and daily operations.

30. TOP MERGERS & ACQUISITIONS
IN TELECOM INDUSTRY
ANGEL JOHNSON
ALENA K SHELLY
ANIT ITOOPVATTOLY

31. Merger of
Vodafone India
&
Idea

32. About Vodafone
• Vodafone British multinational telecommunications
company, with headquarters in London. It
predominantly operates services in the regions of
Asia, Africa, Europe, and Oceania
•Worlds largest
telecommunications groups
and provides a range of
services including voice,
messaging, data and fixed
communications .
•Has mobile operations in 26
countries, partners with
mobile networks in 49 more ,
and fixed broadband
operations in 17 markets.
•By dec/ 31/ 2016, had 470m
mobile customers and 14.3m
fixed broadband customers

33. About idea
• Idea Cellular Limited
• IndustryTelecommunicationsFounded1995;
22 years ago
• Headquarters Mumbai .
• IndiaKey people:KumarMangalamBirla
(Chairman)
• Products Mobile telephony, wireless
broadbandRevenue ₹354
billion (US$5.5 billion) (2016)Net income
•Idea cellular is the 3rd largest
wireless operator in india.
•Listed in national stock
exchange(nse) and bombay stock
exchange (bse) in india.
•Part of Adithiya Brila Group,
•an Indian mobile network
operator based
in Mumbai, Maharashtra.
•Idea is a pan-India integrated
GSM operator offering 2G, 3G and
4G mobile services.
• Idea has 193.96 million
subscribers as of 31 July 2017.[3]

34. Key Highlights
• Highly complementary combination will create India’s largest telecoms operator with the country’s widest
mobile network and a strong commitment to deliver the Indian government’s ‘Digital India’ vision.
• Sustained investment by the combined entity will accelerate the pan-India expansion of wireless broadband
services using 4G/4G+/5G technologies, support the introduction of digital content and ‘Internet of Things’
services as well as expand financial inclusion through mobile money services for the benefit of Indian
consumers, businesses and society as a whole.
• Vodafone will own 45.1% of the combined company and The Aditya Birla Group will then own 26.0%.
• Until equalisation is achieved, the voting rights of the additional shares held by Vodafone will be restricted
and votes will be exercised jointly under the terms of the shareholders’ agreement.
• The transaction is expected to close during calendar year 2018, subject to customary approvals.

35. Advantages
• The combination of Idea and Vodafone India will create the scale to meet customers’ rapidly
accelerating demand for data consumption, and enable significant efficiencies. Run-rate cost
and apex synergies are expected to reach INR 140 billion
• Rationalizing network infrastructure, generating operational efficiencies, lower maintenance
expenses and savings in energy costs.

36.  Higher spectrum availability and larger
single radio access network (RAN)
deployment coupled with re-deployment of
overlapping equipment from rationalised
sites, resulting in lower capex.

37. • Service centers, back office and
distribution efficiencies
• Streamlining regional and nationwide IT
systems and evolving to a single IT system
for the new entity and optimizing general
and administration costs.

38. Disadvantages
Aditya Birla boss Kumar Managalam Birla and Vodafone CEO Vittorio Colao. Revenue leakage as Reliance Jio starts charging and during network
integration period will work against the Idea-Vodafone combined entity. Airtel is likely to gain the most from it. Photo: AP
 Subsequent integration include clash of cultures, confusion about
brand identity, distractions faced by top management and key
employees, and impact on morale of employees amid
apprehensions of job safety.

39. • There will be incremental loss of
revenue market share and
subscriber base of the combined
entity as it attempts to address
these issues across 22 circles in
India and that too in the middle
of a fierce price war.
• “We expect they will lose 5%
revenue market share in FY18
(as Jio starts charging) and a
further 2% during the network
integration period.This implies
their combined subscriber share
will fall from the current 40%
reported to 34.6% by March
2018,” Lane wrote in his report

40. .The most challenging aspect of
the deal was completing, within a very
short time frame, a detailed diligence
of two large companies and
identifying contingent liabilities,
especially given the number of
regulatory and tax litigations involved.
Vodafone has been involved with a
decade-long $2.1 billion tax dispute
with the Indian government that has
now gone to arbitration. A one-time
excess spectrum charge of Rs50
billion is also under litigation.

41. Idea buys 80% in spice telecom
Aditya Birla group’s Idea Cellular bought BK Modi’s Spice
Communications for over Rs. 2,700 crore and now the former owns
more than 80% equity in the latter which is now a subsidiary of the
Mumbai-based telecom operator. Idea Cellular acquired the company
from ModiWellvest andTelekom Malaysia (TMI, now Axiata) in July
2008.

42. Vodafone – Hutchison Essar Merger in 2007
This is one of the largest deals that happened in telecom industry on
February 11, 2007. The company said that it would buy the stake of
67 per cent in Hutchison Telecommunications International, a unit of
Li Ka-shing's Hutchison for $11.1 billion and the company become
India's No. 2 telco by subscribers.
The company is now called Vodafone India after Vodafone Group
Plc. raised its stake to a 100 per cent in the entity.

43. TELENOR-UNITECH WIRELESS DEAL
TELENOR
• Telenor is a Norwegian telecom multinational company which is mostly
government owned.
• It is one of the world’s largest mobile telecommunications company with
operations in Scandinavia, Eastern Europe and Asia.
• Telenor owns networks in 13 countries and has operations in 29 countries.
UNITECH WIRELESS
• Unitech Limited is India's second largest real estate investment
company, and has recently claimed to be the largest real estate builder in
the country.
• Unitech wireless is the telecom wing introduced by Unitech to enter the
Indian telecom industry.

44. FACTS OF THE DEAL
• The deal took place in 2008.
• Telenor completed the initial acquisition of 49% stake in
Unitech Wireless by infusing an investment of Rs. 2380
crore.
• Later Telenor extended the share to 60% in Unitech Wireless
with an overall investment of Rs. 6120 crore.
• Unitech provided the shares to Telenor in order to cover their
debts and to bring successful experience of Telenor in the
Asian market into the Indian Telecom industry.
• The deal with Unitech helped Telenor to establish their
operations in the Indian market.

45. RELIANCE COMMUNICATIONS – AIRCEL DEAL
RELIANCE COMMUNICATIONS
• Reliance Communications Ltd. (stylised as RCom) is an Indian telecommunications company
headquartered in Navi Mumbai, India.
• It provides GSM (Voice; 2G, 3G, 4G) mobile services, fixed line broadband and voice services,
and Direct-To-Home (DTH) services, depending upon the areas of operation.
• Reliance Communications is the sixth largest telecom operator in India with 85.4 million
subscribers, as of May 2017.
• Reliance Communications is a subsidiary of Reliance Anil Dhirubhai Ambani Group.
AIRCEL
• Aircel is an Indian mobile network operator headquartered in Gurgaon that offers voice
and 2G, 3G and 4G data services.
• Maxis Communications holds a 74% stake and Sindya Securities and Investments holds the
remaining 26%.
• Aircel was founded by C Sivasankaran and commenced operations in Tamil Nadu in 1999 and
now it is the fifth largest mobile service provider in India with a subscriber base of 90.32 million
subscribers as of June 2017.
• Aircel is a market leader in Tamil Nadu and has considerable presence in Odisha, Assam and
North-East telecom circles.

46. FACTS OF THE DEAL
• The plan for this merger was announced by Anil Ambani this
year.
• If the merger comes through then the new entity will create a
telecom operator ranked fourth by customer base and
revenues and number three operator by revenues in 12
important circles.
• RCom and Maxis Communications Berhad (MCB) of Malaysia,
which owns Aircel, will hold 50 per cent each.
• The merged company will be one of India's largest private
sector companies, with an asset base of over Rs 65,000 crore
and net worth of Rs 35,000 crore ($5.2 billion).
• The newly merged company will be likely to be named as
AIRCOM.

47. CASE STUDY ANALYSIS
OF MERGER –ACQUISITION
By
ANIL LEO

48. MERGER AND ACQUISITION OF
HUTCH-ESSAR BY
VODAFONE

49. INTRODUCTION
• On February 11,2007 , Vodafone signed an agreement to acquire the 67% of
Hutch-Essar , 52% directly and another 15% indirectly.
• By acquiring they renamed to Vodafone-Essar, but products are branded in the
Name of Vodafone.
• This is done to expand their market share in Indian market wher Hutch has a big
In respect of their revenues and ARPUs.
• The deal was at $13.3bn ($11.1bn plus $2bn debt).
• The sale of its interests in India will enable Hutchison Telecom
to become one of Asia’s best capitalized companies.

50. PROBLEM IDENTIFICATION
• Vodafone has no control over Indian market. Their major role is in
world within 19 circles(zones). And also they have huge revenue
in global market.
• In Hutch-Essar, eventhough they have high ARPUs but their
revenues are falling.
• Due to mutual distrust between Hutch –Essar.
• Hutch thinks its right time to quit Indian operations and finance
other operations globally.

51. CASE STUDY ANALYSIS
OF MERGER –ACQUISITION
By
ANIL LEO

52. MERGER AND ACQUISITION OF
HUTCH-ESSAR BY
VODAFONE

53. Why did Hutch wanted to exit ?
• Urban markets in the country had become saturated.
• Future expansion would have had to be only in the rural areas, which
would lead to falling average revenue per user(ARPU) and consequently
lower returns on its investment.
• HTIL also wanted to use the money earned through this deal to fund it's
business in Europe.
• The sale of the its interest in India will enable HTIL to become one of the
Asia's best capitalized company.

54. Why Everyone Wants Hutch
• It the fastest-growing cellular market in the world.
• Fourth largest mobile operator in India with 24.41 million
subscribers.
• Present in 16 of 23 circles. Has license for six others barring
Madhya Pradesh.
• Revenues of $908 million (Rs 4,086 crore) in H1 2006
against $1.29 billion (Rs 5,800 crore) in 2005.
• Operating profits of Rs 1,017 crore, EBITDA margins at
32.7 per cent in H1 2006

55. Why Vodafone wants to acquire Hutch-Essar?
• Vodafone is the 3rd largest telecom industry in terms of revenue and
ARPUs in world, but it does not have any control over Indian market.
• Hutch was top industry in India in terms of ARPUs and also revenues.
So to control Vodafone acquired 67% of Hutch-Essar and renamed as
Vodafone Essar. But products are branded in name of Vodafone.
• By this Vodafone can expand its market share and can have big growth
in industry.

56. Merger Details
• The partners have agreed that Hutchison Essar will be renamed
Vodafone Essar
• On February 11, 2007, Vodafone agreed to acquire the
controlling interest of 67% in Hutch-Essar for US$11.1 billion
• Deal size and stake Fourth largest deal of the year 2007
at $13.3bn ($11.1bn plus $2bn debt).
• Hutchison Essar valued at $18.8bn.
• The sale of its interests in India will enable Hutchison Telecom
to become one of Asia’s best capitalized companies.

57. Financing the Deal
• Vodafone has $5 billion from the sale of its Japanese unit for $15 billion
last year (the remaining $10 billion is expected to go back
to shareholders).
• It will also get $1.62 billion cash from its 5.6 per cent stake sale in Bharti.
• In addition, Vodafone has free cash reserves (for the first six months of
2006) in excess of $3 billion.
• It has also sold its 25 per cent stake in Swisscom Mobile and exited
Belgium

58. Synergies claimed
• Vodafone gets access to the fastest growing mobile phone market in the
world that is expected to touch 500 million subscribers by 2010.
• Cellular penetration in rural India is below 2%, but 67% of India's
population lives in rural India.
• 3G is set to take off in India, allowing data and video to ride on
cellular networks.