Vodafone Idea Deal

Sectoral conditions Pre-Merger

Subscribers in millions
• 6.5% telecom Industry contribution to GDP of India in 300

250
2017. 200

150

• 1.1b Total number of Subscriber Identity Module (SIM) 100

50
connections in 2017.
0
0 1 2 3 4 5 6 7 8 9

• Voice calls & Internet tariffs were high pre-merger, entry of Subscribers

Jio slashed rates thereby impacting net profit. Market Share

• 100mil users within 6months of Jio’s launch. 21% 19% Vodafone

Idea

• Vodafone, Idea & Airtel saw a decline in market value and BSNL/MTNL

market share. 17% Aircel

25% Bharti Airtel
• Sector saw consolidation to survive critical competition. 9% Others
9%
FEATURES
About Vodafone Group
• Company Details: Vodafone is a major British multinational telecom company
headquartered in London, UK.
• Operating in 25 countries and partnered with 47 countries enjoys wide range
of market share.
• Innovative advertising strategies.
• Success of M-pesa
• Mobile services, fixed broadband, loT(Internet of Things), Vodafone TV, Cloud
& Security, Carrier services etc.
• Engaging Marketing strategies-ZOO ZOO, Pug.
• Financial: Vodafone Group Revenue:
€43.6 billion-FY ending March 31st 2019 (y-o-y growth of negative-6.43%)
€46.6 billion-FY ending March 31st 2018.
About Idea Cellular Group:
Company details:
• Idea Cellular was founded in the year 1994 jointly by Aditya Birla Group, AT&T and TATA group.
• Idea is a pan-India integrated wireless broadband operator offering 2G, 3G and 4G services,
and has its own NLD and ILD operations, and ISP license.
• In 1995 obtained GSM License for Gujrat and Maharashtra circles.
• 2004-Acquired Escotel Mobile Communications and renamed to IDEA communications Ltd.
• 2006-Reached 10 million subscriber base. Acquired Escorts telecommunications and renamed
as Idea Telecommunications Ltd.
• 2007- IPO launched and listed on BSE and NSE. Reached 20 million subscriber market.
• 2008-Launched services in Mumbai and Bihar.
• 2011- Launched 3G in 10 circles . 3rd largest operator in India in revenue terms.
• 2013-Became a 3rd largest operator in subscriber base. Received USD 1 million grant from US
for Green Telecom Project.
• Products & Services: Idea Prepaid cellphone connection, Postpaid, Postpaid services, Idea
Handy Phone.
• Idea Cellular dropped to Rs 81,261 million 2017and in 2016 was Rs 94,783 million.
DEAL ATTRACTIVENESS
• TO BECOME BIGGEST TELECOM SECTOR IN INDIA.

• BOTH COMPANIES ENJOY BENEFITS IN TERMS OF NETWORK AND ALSO IN

TERM OF SERVICES.

• HELPS TO REDUCES THE EFFECT OF TARIFF WAR THAT GENERALLY OCCURS IN

TELCOM INDUSTRY.

• THROUGH THE MERGER MARKET SHARE AND NO. OF CUSTOMERS ALSO

INCRESE AND PROVIDE BOOST IN THE REVENUE OF BOTH THE FIRMS.
REASON FOR DEAL
• JIO PRICE WAR

• LEAD TO BETTER FINANCIAL AND SUSTAINABILITY FOR BOTH THE COMPANIES

• MERGERS HELP THEM TO EXCEED 50% REVENUE SHARE

• HELPS TO PAY OFF THE THEIR DEBTS AND LARGE SUMS OF CREDITS INFUSED
IN SYSTEM
Valuation and synergy
• Vodafone & idea deal – survival from
competition.
• Creating India’s largest
telecommunications company
• Combined Revenue Market Share of
40.7% and Customer Market Share of
35.1%.
• Highest broadband capacity
• Payment banks
Synergy Benefits
• Reduce costs and support company’s
capex needs.

• Remove duplication of equipment.

• Cost Synergies from 4th year=14000

cr. (60% opex and 40% capex)
Sectoral condition post-merger
• 8.2% telecom Industry contribution to GDP of India in 2020. Subscriber added in lakhs in Q3’20
35.54
40 32.6
• 1.7b Total number of Subscriber Identity Module (SIM) connections in 30
20
10
2020.
0
Subs added
• 32.53% total market share of Vodafone-Idea, followed by Jio and -10
-20
-30
Bharti Airtel.
-40
-37.26
• Only Jio & BSNL registered a positive growth rate. -50

• Vodafone-Idea recorded a staggering Rs. 73,878 crore of net loss in FY20 Jio Vi Bharti Airtel
due to mandated statutory dues. Market Share%

450
26%
400
35%
350
300
250
200 10%
150
100
50 29%
0
0.5 1 1.5 2 2.5 3 3.5 4 4.5
Vodafone Idea BSNL/MTNL
Subscribers Bharti Airtel Jio
Legalities and legal aspects (Vodafone & idea)
• Approval from DoT - (Department of telecommunication)The companies
should notify the proposal of a merger to the DoT as filed before the NCLT.
• The company cannot hold more than 25%of the total spectrum assigned for
access services and 50 % of the spectrum assigned in a given band in the
concerned service area.
• Approval from CCI- proposed merger would also require approval from CCI
as it is likely that the merger will exceed the assets or turnover thresholds
prescribed under the Competition Act, 2002.(competition commission)
• -The investigated relevant markets on the basis of combined market share
and incremental market share of the merged entities, and market share of
the competitors and significant players, among other factors.
Approval from NCLT - The proposed merger will be dealt with by the
newly constituted NCLT and will be governed by the provisions of the
Companies Act, 2013 as the provisions relating to compromises,
arrangements and amalgamations were notified in December 2016.

Conclusion -While the merger is still in the discussion stage, the

parties can expect regulatory hurdles as discussed above in the
event they decide to proceed with the transaction. In addition to
this, Vodafone’s unresolved tax dispute could be another challenge
for the merged entity.
Entity performance post merger(Vodafone &
idea)
Vodafone and Idea reported their merger in 2017, which had an immense
effect in the Indian telecom area.
Vodafone India was the second biggest player of the Indian Telecom Industry as
far as supporter base while Idea Cellular Limited has the third biggest endorser
base in India
Idea Cellular was an auxiliary of Aditya Birla Group. This consolidation didn't
just make a telecom goliath however has had wide-going ramifications for the
business, benefits, the staff and shoppers just as it pushed more consolidation
moves in the telecom area.
The current situation of Indian telecom market is additionally broke down to
comprehend where Vodafone-Idea stand today
THAK YOU