The document discusses the merger between Vodafone India and Idea Cellular to form Vodafone Idea Limited in 2018. It was a horizontal merger between the two largest telecom operators in India. The merger aimed to improve infrastructure, offer more competitive tariffs, and better position the company for 5G technology against competitors like Reliance Jio. Significant cost synergies were expected from network sharing and optimization that could reduce debt levels and increase profits for the combined entity. The valuation used an enterprise value of Rs. 82,800 crore for Vodafone and Rs. 72,200 crore for Idea, accounting for their spectrum holdings, customer bases and debt levels.

1. VODAFONE
&
IDEA

2. INTRODUCTION
◦ Vodafone Idea Limited s an Indian telecom operator with its headquarters based in Mumbai, Maharashtra and
Gandhinagar, Gujarat.
◦ On 31 August 2018, Vodafone India merged with Idea Cellular, and was renamed as Vodafone Idea Limited.
◦ The merged entity continues using both the Idea and Vodafone brand.
◦ Currently, the Vodafone Group holds a 45.1% stake in the combined entity, the Aditya Birla Group holds 26% and the remaining
shares will be held by the public.
◦ Kumar Mangalam Birla heads the merged company as the Chairman and Balesh Sharma used to be the CEO.
◦ As of 31 December 2019, Vodafone Idea has a subscriber base of 332.65 million,making it second largest mobile
telecommunications network in India and fifth largest mobile telecommunications network in the world.
◦ Vodafone Idea has a broadband network of 340,000 sites, distribution reach of 1.7 million retail outlets.

3. TYPE OF MERGER- HORIZONTAL
◦ It is a merger or business consolidation that occurs between firms that operate in the same industry.
◦ Vodafone Idea are in the same line of business(telecom operator).
◦ Competition tends to be higher among companies operating in the same space, meaning synergies and potential gains in
market share are much greater for merging firms.
◦ This type of merger occurs frequently because of larger companies attempting to create more efficient economies of scale.
◦ A horizontal merger can help a company gain competitive advantages.

4. Vodafone Idea - Lead - Digital Life Cycle Management
Job Purpose
 To own and deliver Customer Experience across all the digital channels through strategic planning, consistent execution, collaborative and
robust engagement with peers (corporate and circles) and partners.
 Defining the customer journey workflows, maximize customer engagement and retention. Continuous benchmarking with competitive
digital journeys to ensure best in class customer experience.
 To own customer engagement & retention strategy
Key Result Areas/Accountabilities -
Application Governance
- Ensure smooth operation for all digital tools & applications
- Continuously work on enhancement of features
- Oversee all mobile applications for all CIOT products
- Collaborate with internal teams to ensure brand consistency
- Ensure App experience to be consistent across software (Android /IOS/Microsoft)

5. ◦ Continuous Quality Evaluations
- Ensure no downtime/ time lag on app experience
- Ensure tracking is accurate and reports available are as per timelines identified
- Ensure retrieval of information /videos/ logs available easily on the app
- Understanding of systems back up & restoration through app (to protect customer privacy & data leakage from a regulatory standpoint)
Analytics
- Analyze usage metrics & feedback
- Ensure that app downloads are equal to sales & app uninstalls are not more than the KPIs defined
- Analyse customer behaviour & usage pattern and provide actionable insight to product, sales and distribution and marketing teams
- Use user insight, analytics, best practices, competitor analysis to support design decisions
Engagement & Retention
- Generate innovative ideas to increase engagement and usage of the app
- Increase customer awareness of the benefits & features of all CIOT products
- Monitor communication effectiveness and improvise on the same

6. MOTIVES OF IDEA VODAFONE MERGER
Improved infrastructure to provide superior service
The biggest impact of this merger will arguably be seen in the improvement of telecom infrastructure that currently
exists in the country. Since the entry of Reliance Jio back in 2016, the telecom sector has improved greatly in terms of
connectivity. However, quality of service has gone down drastically.
This merger should help Vodafone Idea Limited provide better service in terms of both connectivity and quality.
 Improved tariffs
Despite the merged entity carrying a debt of thousands of crores, existing customers of Idea and Vodafone can expect
to be offered superior services at much aggressive price points, which would, in turn, see Jio and Airtel indulge the
new telecom operator in another round of price cuts and tariff readjustment to fend off competition.

7. MOTIVES OF IDEA VODAFONE MERGER
The fight for the future
Apart from providing better services at more affordable tariffs, the merged entity should also help the
Indian telecom sector improve adoption of state of the art technologies, and hasten the move
towards the next big thing in telecom, 5G.
 Vodafone Idea Limited will be better placed to not only improve 4G connectivity but also upgrade its
network to 5G in the years to come.

8. SYNERGY: FINANCIAL & OPERATIONAL
The success of the mega merger between Idea cellular Ltd & Vodafone India Ltd depends largely on synergy benefits
that can accrue by combining operations.
The merger of Idea Cellular and Vodafone holds the potential for significant cost savings and 3G/4G spectrum gain
crucial in market share battle against Reliance Jio and Airtel.
 Vodafone-Idea merger holds the potential for significant cost savings. With a larger scale and elimination of duplicate
costs, margins can rise substantially.
 Vodafone and Idea said in a statement that annual savings, both in terms of operating costs as well as capital
expenditure, will be around Rs14,000 crore annually by the fourth full year of operations as a combined entity. About
two-thirds of this will be on account of savings in operating costs. The net present value of total savings (opex and
capex) is estimated at Rs70,000 crore ($10.5 billion).

9. SYNERGY: FINANCIAL & OPERATIONAL
The merger will also result in a sharp fall in leverage. Idea and Vodafone expect the net debt/Ebitda for the combined entity to
fall from around 4.4 times to around 3 times.
It will be aided by asset sales—both companies intend to sell their tower assets and reduce debt. Besides, capex synergies will
contain debt to some extent in the future.
In addition, opex synergies will result in higher profits.
 With synergy benefits expected to result in higher profits and leverage expected to reduce, the combined entity’s equity
valuation is estimated to soar.
 It tariffs continue to decline and freebies continue to increase.
Vodafone and Idea will be in a far better position together than trying to navigate the gigantic challenges in the telecom market
on their own.

11. VALUATION METHOD
Till the merger is completed, Vodafone and Idea will be operating separately and post-consolidation they might use both Brand Name at
least few years till complete migration of customers happens.
The transaction values Vodafone at Rs. 82,800 crore (EV) and Idea at Rs. 72,200 crore (EV) debt of Rs. 55,200 and Rs. 52,700 crores
respectively.
 The ideas has been valued much lower the current market price and which is also reflected with fall in the price of Idea Cellular post
announcement.
 Vodafone higher valuation is supported with higher revenue, customer base and total spectrum holding as compared with IDEA.
 The Deal of Vodafone and idea has been valued fairly and to note that the Aditya group has committed a fixed Price of Rs. 109 per share
to acquire 4.9 % stake on completion of merger (2018) From Vodafone Group. And, Option to acquire 9.5 % stake for Rs. 130 per share
in the period of 4 years to bring stake to equal.

12. SWAP RATIO
 The merger ratio is based Idea's price at Rs 72.5 a unit.
Vodafone will own 45.1% in the combined entity after transferring 4.9% to the promoters of Idea Cellular for Rs
3,874 crore in cash post the merger.
Kumar Mangalam Birla and other promoters of Idea Group will hold 26% and the rest will be owned by the public.
Prior to completion of the transaction, Vodafone and Idea intend to sell their standalone tower assets and Idea’s
11.15% stake in Indus Towers to reduce leverage in the combined company.
The companies added that the implied enterprise value is Rs 828 billion or $ 12.4 billion for Vodafone India and Rs
722 billion or US$10.8 billion for Idea, excluding its stake in Indus Towers.


13. THANK YOU
BY
SHRADDHA AGRAWAL
BBAG-17037